Motorola (MOT) upgraded -- has it hit bottom?

Motorola Inc. (NYSE: MOT) shares are gaining today after Lehman Brothers upgraded the stock to overweight from equal weight, saying improvements in operating expenses should help the company's phone unit return close to break-even by the fourth quarter. If you think the trouble phone manufacturer has hit bottom, then now could be a good time to look at a bullish hedged trade on MOT.

After hitting a one year high of $26.30 in October, the stock has declined steadily over the past ten months, reaching a one year low of $15.16 earlier this month. MOT opened this morning at $16.73. So far today the stock has hit a low of $16.67 and a high of $17.03. As of 10:55, MOT is trading at $16.96, up $0.49 (3.0%). The chart for MOT looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $15 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverages nice returns. For this particular trade, we will make a 13.6% return in just five months as long as MOT is above $15 at January expiration. Motorola would have to fall by more than 11% before we would start to lose money.

MOT hasn't been below $15 at all in the past year and has shown support around $16 recently. This trade could be risky if the company's earnings (due in early November) disappoint, but even if that happens, this position could be protected by the bottom is looks to be forming around $16.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Brent owns and controls bullish hedged positions in MOT.