United States Steel Corp. (NYSE: X) shares are trading lower this morning as investors fear of a recession appear to be strong despite a surprise rate cut by the Federal Reserve this morning. Steel producers were down across the board this morning, as new construction and manufacturing tend to slow down during a recession, which could be bad news for X. However, some of the markets fears are evaporating after the rate cut and X seems to be on the rebound. 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 X.

After hitting a one-year low of $71.04 last January, the stock hit a one-year high of $127.26 in June. This morning, X opened at $96.29. So far today the stock has hit a low of $96.29 and a high of $104.48. As of 11:05, X is trading at $104.21, down $0.51 (-0.5%). The chart for X looks neutral and improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider a February bear-call credit spread above the $135 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 8.7% return in 4 weeks as long as X is below $135 at February expiration. US Steel would have to rise by more than 29% before we would start to lose money.

X hasn't been above $128 at all in the past year and has shown resistance around $112 recently. This trade could be risky if the US economy picks back up, but even if that happens, this position could be protected by resistance X might find at its recent high around $120.

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