Agilent Tech. (A) soars on Q4 earnings

Agilent Technologies Inc. (NYSE: A) shares are trading higher today after the company posted a higher quarterly profit yesterday after the close. Net profit rose to $180 million, or 46 cents per share, from $149 million, or 36 cents a share, a year earlier. Revenue rose to $1.45 billion from $1.33 billion a year earlier and ahead of the average Wall Street forecast for $1.41 billion. 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 A.

Agilent hit a one-year low of $30.26 in March, and made its one-year high of $40.42 in July. A opened this morning at $34.99. So far today the stock has hit a low of $34.93 and a high of $36.80. As of 11:00, A is trading at $36.80, up $3.10 (9.2%). The chart for A 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 $32.50 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 10.4% return in just 9 weeks as long as A is above $32.50 at January expiration. Agilent would have to fall by more than 11% before we would start to lose money. Learn more about this type of trade here.

A hasn't been below $32.50 by more than a few cents since March and has shown support around $33 recently. This trade could be risky if the stock's earnings aren't quite as rosy as they seem at first glance, but even if that happens, this position could be protected by support the stock formed between $32.50 and $35 over the past four months.

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 A.