Nokia Corp. (NYSE: NOK) shares are trading higher after analysts at Fortune wrote in that NOK's global reach and the strength of the international wireless market should help the company meet earnings targets when it reports on Thursday. NOK is also receiving support from an optimistic second-quarter forecast from Intel (NASDAQ: INTC), which has bolstered the tech sector this morning. 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 NOK.
After hitting a one-year low of $23.61 last April, the stock hit a one-year high of $42.22 in November. NOK opened this morning at $33.19. So far today the stock has hit a low of $32.90 and a high of $33.62. As of 12:15, NOK is trading at $33.50, up $1.40 (4.4%). The chart for NOK looks bearish and steady, 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 $28 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 7.1% return in just one month as long as NOK is above $28 at May expiration. Nokia would have to fall by more than 16% before we would start to lose money. Learn more about this type of trade here.
NOK hasn't been below $28 since August and has shown support around $29 recently. This trade could be risky if the company's earnings (due out tomorrow) disappoint, but even if that happens, this position could be protected by the support the stock might find around $30, where it bounced in 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 NOK. He does control a bullish hedged trade on INTC.
Biotech ETFs: Best bets on health care reform
Cramer on BloggingStocks: The world's been waiting for the new GM 
Dell fights Taiwanese authorities over pricing mishaps
