Progressive Corp. (NYSE: PGR) shares are trading higher after the company announced this morning its first quarter profit dropped 34% to $239.4 million, hurt by lower premiums. However, PGR posted earnings of 35 cents per share, exceeding analysts' estimates for a quarterly profit 29 cents per share. If you think that the stock 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 PGR.

After hitting a one-year high of $25.16 in June, the stock hit a one-year low of $15.00 in March. PGR opened this morning at $16.70. So far today the stock has hit a low of $16.70 and a high of $17.39. As of 12:25, PGR is trading at $17.25, up $0.65 (3.9%). The chart for PGR looks bearish and steady while S&P gives PGR a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $15 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 16.3% return in just four months as long as PGR is above $15 at August expiration. Progressive would have to fall by more than 27% before we would start to lose money. Learn more about this type of trade here.

PGR hasn't been below $15 at all in the past year and has shown support around $16.25 recently. This trade could be risky if the stock continues on its downward trend, but even if that happens, that position could be protected by support the stock might find just above $15, where it bottomed out over the past month.

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 PGR.