Microsoft might overbid on aQuantive

Microsoft Corp. (NASDAQ: MSFT) opened at $28.60. So far today the stock has hit a low of $28.21 and a high of $28.75. As of 11:45 a.m., MSFT is trading at $28.71, up $0.10 (0.3%).

After hitting a one year high of $31.48 in January, the stock has dipped down to a support line around 27 over the past two months. Following Google's (NASDAQ: GOOG) acquisition of DoubleClick late last week, Jim Cramer and others on Wall Street are expecting a Microsoft bid – perhaps overbid – soon on a company like aQuantive (NASDAQ: AQNT) or ValueClick (NASDAQ: VCLK). Microsoft also unveiled several new products this morning, and the market is reacting rather tepidly. The technical indicators for this stock have been neutral and improving, while S&P gives MSFT a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $32.50 range. MSFT has not been above $32.00 ever and has shown resistance around $29. This trade could be risky if MSFT's earnings (due out 4/26) are a positive surprise, but even if the stock rises some, this position could be protected by the top the chart looks to have formed around $31.50.

Brent Archer is an options analyst and writer at Investors Observer. Do you have any deadwood in your portfolio? Check out the 18 Warning Signs That Tell You When To Dump A Stock.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about.