Bank of New York-Mellon earnings don't impress

The Bank of New York Mellon Corporation (NYSE: BK) opened at $46.47. So far today the stock has hit a low of $45.49 and a high of $46.57. As of 11:15, BK is trading at $45.75, down $0.38 (-0.8%).

Following a strong surge over the past six weeks, the stock hit a new 52-week high yesterday at $46.93. The company announced earnings of 63 cents per share, just beating Wall Street expectations of 61 cents per share, but profit slipped a hair due to costs stemming from the company's purchase of Mellon Financial Corp. Recent technical indicators for the stock have been bullish and steady, while S&P gives BK a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider a September bear-call credit spread above the $50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk and leverage returns. For this particular trade, we will make an 11.1% return in just 2 months as long as BK is below $50 at September expiration. BK would have to rise by 9% before we would start to lose money.

BK hasn't been above $50 at all this year but has been rising sharply recently. This trade could be risky if it turns out that the only reason earnings were down was due to the acquisition.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Brent neither owns nor controls positions in BK.