eBay Inc. (NASDAQ: EBAY) shares are trading higher today after an analyst reiterated EBAY as a Buy and upped his estimates for the company's Q1 results. The Commerce Department also reported that spending rose 2.3 percent in the fourth quarter of 2007, ahead of a 1.9 percent increase expected by most observers, which could be good news for EBAY. 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 EBAY.

After hitting a one-year high of $40.73 in October, the stock hit a one-year low of $25.10 last week. EBAY opened this morning at $29.74. So far today the stock has hit a low of $29.56 and a high of $31.17. As of 1:40, EBAY is trading at $31.05, up 1.58 (5.4%). The chart for EBAY looks neutral but 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 $25 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 an 8.7% return in just two months as long as EBAY is above $25 at May expiration. eBay would have to fall by more than 19% before we would start to lose money. Learn more about this type of trade here.

EBAY hasn't been below $25 at all in the past year and has shown support around $29 recently. This trade could be risky if the company's earnings (due out on 4/16) disappoint, but even if that happens, this position could be protected by the support the stock might find around $25, where it bottomed out over the past two months.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in EBAY.