Sprint-Nextel appoints new CEO

Sprint Nextel Corp. (NYSE: S) shares are trading higher today after the company announced this morning that it has named Embarq Corp (NYSE: EQ) CEO Dan Hesse as its new president and chief executive. Sprint hopes the seasoned telecom veteran can turn around the company, which has lost market share to rivals AT&T (NYSE: T) and Verizon (NYSE: VZ). 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 S.

After hitting a one-year high of $23.42 in June, the stock hit a one-year low of $13.86 yesterday. S opened this morning at $14.25. So far today the stock has hit a low of $13.88 and a high of $14.25. As of 10:55, S is trading at $13.98, up 7 cents (0.5%). The chart for S 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 February bull-put credit spread below the $13 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 17.6% return in just 2 months as long as S is above $13 at February expiration. Sprint would have to fall by more than 7% before we would start to lose money.

S hasn't been below $13.86 at all in the past year and has shown support around $14 recently. This trade could be risky if the stock continues its downward slide, but even if that happens, this position could be protected by bargain hunters who might think that S has gotten too cheap.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in S, EQ, VZ, or T.