Apple (AAPL) rises on Commerce Dept. report

Apple Inc. (NASDAQ: AAPL) shares are trading higher today after the Commerce Department reported that disposable income and personal savings both rose in February. This has sent the market up this morning, as investors seem to be viewing the news as a sign that consumer spending could make a comeback. 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 AAPL.

After hitting a one-year low of $89.60 in April, the stock hit a one-year high of $202.96 in December. AAPL opened this morning at $141.80. So far today the stock has hit a low of $141.60 and a high of $144.65. As of 12:45, AAPL is trading at $143.65, up $3.40 (2.4%). The chart for AAPL looks neutral but improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $105 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 7.5% return in just seven weeks as long as AAPL is above $105 at May expiration. Apple would have to fall by more than 27% before we would start to lose money. Learn more about this type of trade here.

AAPL hasn't been below $105 at all since last May and has shown support around $128 recently. This trade could be risky if the company's earnings (due out on 4/23) disappoint, but even if that happens, this position could be protected by the support the stock might find around $120, where it bottomed over the past few 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 controls a bullish hedged position in AAPL.