Sony Corp. (NYSE: SNE) shares are trading higher with many other retail-related stocks as Black Friday marked the start of the holiday shopping season. Investors are optimistic about the holiday spending spree today, pushing the markets higher. Also, a price cut on Sony's PlayStation 3 is expected to keep the electronics maker on better footing against Nintendo and Microsoft (NASDAQ: MSFT)'s competing platforms. 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 SNE. The stock hit its 52-week high of $59.84 in May and set its 52-week low of $38.50 in November. SNE opened this morning at $47.72. So far today the stock has hit a low of $47.72 and a high of $49.15. As of 11:00, SNE is trading at $49.06, up $1.73 (3.6%). The chart for SNE 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 $45 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. This particular trade will make a 6.4% return in just four weeks as long as SNE is above $45 at December expiration. Sony would have to fall by more than 8% before we would start to lose money.
SNE hasn't been below $45 by more than a few cents since January and has shown support around $47 recently. This trade could be risky if the holiday season is poor, but even if that happens, this stock could find support at $45, where it bounced twice in the past four months.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in SNE. he does control a bullish hedged position on MSFT.
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