BP makes plans for alternative energy production

BP plc (NYSE: BP) opened at $71.30. So far today the stock has hit a low of $70.71 and a high of $71.30. As of 11:10, BP is trading at $70.86, up $0.75 (1.1%).

After hitting a one year high of $73.28 in August, the stock dipped to a year low of $58.62 in March before shooting up into the high $60s again in late spring. The stock has shown support around 66 over the past several months. Shares are rising this morning after the company announced plans to work with Associated British Foods PLC and DuPont (NYSE: DD) to develop a $400 million bioethanol plant in northern England as BP seeks alternative forms of energy generation. Recent technical indicators for the stock have been bullish with slight deterioration, while S&P gives BP a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $65 range. BP hasn't been below $65 since March and has shown support around $66 recently. This trade could be risky if crude oil futures take a nosedive, but even if that happens, our position could find support at $66, due to the stock's 200 day moving average, which is currently at $66 and rising..

Brent Archer is an options analyst and writer at Investors Observer.
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. At publication time, Brent neither owns nor controls positions in BP or DD.