Deere & Co. (NYSE: DE) is getting a boost this morning from competitor CNH Global (NYSE: CNH), which announced Q3 earnings this morning. CNH's profit nearly doubled, lifted by strong operating margins. The company beat EPS estimates by 15% and shares were up almost 8% in early trading, bringing other farm equipment makers along for the ride. Investors will be expecting similarly good news from DE when it reports in late November. 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 DE.

DE stock has been gaining steadily all year, hitting a 52-week high of $157.30 earlier this month. Deere opened this morning at $147.73. So far today, the stock has hit a low of $147.01 and a high of $149.75. As of 10:55, DE is trading at $149.04, up $4.20 (2.9%). The chart for DE looks bullish 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 December bull-put credit spread below the $115 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 5.3% return in just 2 months as long as DE is above $115 at December expiration. Deere would have to fall by more than 23% before we would start to lose money. Learn more about this type of trade here.

DE hasn't been below $115 since May and has shown support around $142 recently. This trade could be risky if the company's earnings (due out 11/21) disappoint, but even if that happens, this position could be protected by recent support between $115 and $120 where the stock bottomed in August, plus the stock's 200-day moving average, which is currently at $120 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 DE or CNH.

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