Priceline.com (PCLN) lifted by of Chinese partnership

priceline.com Inc. (NASDAQ: PCLN) shares are trading higher after the company announced on Friday that it has agreed to a one-year partnership with Chinese classified information search engine Kooxoo.com. Under the deal, PCLN will gain data access to over 8,000 hotels in China, which could give it a leg up in international bookings over competitors Expedia (NASDAQ: EXPE) and Orbitz (NYSE: OWW). 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 PCLN.

After hitting a one-year low of $52.00 last March, the stock hit a one-year high of $129.24 in February. PCLN opened this morning at $119.48. So far today the stock has hit a low of $119.04 and a high of $128.75. As of 12:30, PCLN is trading at $127.87, up $9.24 (7.8%). The chart for PCLN looks bullish and steady, while S&P gives the stock its lowest 1 Star (out of 5) strong sell rating.

For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $70 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 four months as long as PCLN is above $70 at July expiration. Priceline would have to fall by more than 46% before we would start to lose money.

PCLN hasn't been below $70 since August and has shown support around $110 recently. This trade could be risky if the US economy gets even weaker in the coming months, but even if that happens, this position could be protected by the support the stock might find just above $90 from its 200 day moving average.

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