Symantec Corporation (NASDAQ: SYMC) shares are trading higher today after the company announced two new programs designed to improve customer service and tech support for Symantec partners. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on SYMC.
After hitting a one-year high of $22.19 in October, the stock dipped to a 52-week low of $16.20 in March. SYMC climbed to trade higher in the summer months, but dropped sharply in late July and early August. SYMC opened this morning at $19.36. So far today the stock has hit a low of $19.34 and a high of $19.84. As of 10:35, SYMC is trading at $19.71, up $0.31 (1.6%). The chart for SYMC looks bearish but improving, 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 $17.50 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 leverage nice returns. For this particular trade, we will make a 16.3% return in less than 5 months as long as SYMC is above $17.50 at January expiration. Symantec would have to fall by more than 11% before we would start to lose money.
SYMC hasn't been below $17.50 since April and has shown support around $18.50 recently. This trade could be risky if the company's earnings (due out on 10/24) disappoint, but even if that happens, this position could be protected by the support the stock formed just below $18 about a month ago.
Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Brent neither owns nor controls positions in SYMC.
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