Tiffany & Co. (NYSE: TIF) stock is falling this morning after the company announced that it has cut its fiscal year 2007 profit estimate to $2.40 to $2.43 per share. It had previously forecast profit of $2.49 to $2.54 per share. TIF cited a 2 percent decrease in same-store sales for December as the major reason for the revised guidance. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on TIF.

After hitting a one-year high of $57.34 in October, the stock has hit a new one-year low today. This morning, TIF opened at $37.95. So far today the stock has hit a low of $34.85 and a high of $39.00. As of 10:30, TIF is trading at $34.76, down $5.56 (-13.8%). The chart for TIF looks bearish and steady, while S&P gives the stock a very positive 5 STARS (out of 5) strong buy rating.

For a bearish hedged play on this stock, I would consider a May bear-call credit spread above the $50 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 5.3% return in 4 months as long as TIF is below $50 at May expiration. Tiffany would have to rise by more than 43% before we would start to lose money.

TIF hasn't been above $30 since early November and has shown resistance around $43 recently. This trade could be risky if the economy turns around quickly, but even if that happens, TIF would have to climb above strong resistance it has formed between $45 and $50 as well as its 50 and 200 day moving averages.

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