ConAgra Foods, Inc. (NYSE: CAG) shares are trading higher today after the company raised its outlook for Q2 earnings (expected 12/20) due to strong performance in trading and merchandising. 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 CAG.

After hitting a one-year high of $28.35 last December, the stock hit a one-year low of $22.81 in November. CAG opened this morning at $24.90. So far today the stock has hit a low of $24.86 and a high of $25.61. As of 11:20, CAG is trading at $25.56, up $1.17 (4.8%). The chart for CAG 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 March bull-put credit spread below the $22.50 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. This particular trade will make a 6.4% return in just 4 months as long as CAG is above $22.50 at March expiration. ConAgra would have to fall by more than 15% before we would start to lose money.
CAG hasn't been below $22.50 at all in the past year and has shown support around $23 recently. This trade could be protected by strong support around $23 where the stock bottomed in early November.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in CAG.