Today US markets are following Europe’s sell off, and being led down by traditionally safe, defensive sectors like the utilities and healthcare. Johnson & Johnson is one of those names being sold, and is seeing bearish option activity. The biggest trade this morning was the sale of 3,179 July 90 calls for $0.55. This is neutral to bearish trade that expects the stock to be below 90.55 at July expiration.

There are a few reasons to bet that JNJ, which is up 21% year to date when then S&P 500 is only up 13%, is due for a breather. The stock has slightly outperformed the Healthcare Sector this year, benefiting from a flight to safe, defensive, dividend paying names. However, the stock’s PE of 23.75 is near levels not seen since 2005 and suggests that the stock’s price has gotten a bit ahead of its earnings. JNJ’s CFO Dominic Caruso has even hinted that he would not expect the stock to continue to rally at the same pace it has the past few months. One point of concern is a decline in earnings from the company’s medical devices and diagnostic sales, traditionally very profitable sectors.

If you are long this stock, now is probably a good time to revalue your portfolio and to do some rebalancing. Trimming a big winner like JNJ is never a bad idea, and one way to do that is by selling calls. By selling a call against a long stock position, this trader has indicated that they are willing to take profits on their stock at $90/share, and will be compensated $0.55 (3.8% annualized) for that. This is an excellent supplement to the stock’s 3% dividend yield, and is a great way to play a potential summer range in the market.