Corning Inc. (NYSE: GLW) shares are rising today after Taiwanese LCD manufacturer AU Optronics (NYSE: AUO) said this morning that there could be a global supply shortage of LCDs next year as more consumers want to buy LCD televisions. An official with AU said supply is expected to grow by 22-25% in 2008, while demand could increase by 28-30%. GLW should also be a beneficiary of increased demand for LCDs. 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 GLW.

After hitting a one-year low of $18.12 in January, the stock hit a one-year high of $27.25 in July. GLW opened this morning at $24.34. So far today the stock has hit a low of $24.03 and a high of $24.41. As of 11:20, GLW is trading at $24.31, up 38 cents (1.6%). The chart for GLW looks neutral and improving, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $20 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 13.6% return in just 5 months as long as GLW is above $20 at May expiration. Corning would have to fall by more than 17% before we would start to lose money.

GLW hasn't been below $20 since last January and has shown support around $23 recently. This trade could be risky if consumer spending on luxury items like LCDs tails off in the coming months, but even if that happens, this position could be protected by the support the stock might find around $22, where it bounced in November.

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