Corning (GLW) dragged lower by inflation report

Corning (NYSE: GLW) shares are falling today after the Labor Department reported that outside of food and energy, prices rose by 0.4% last month, which was double what analysts had expected. For the full year, inflation was the highest it has been since 1991. As costs for everyday goods increase, fewer people will be interested in purchasing major electronics which need LCDs from Corning. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on GLW.

After hitting a one-year low of $20.04 in January, the stock has risen to make a one-year low of $28.07 this month. This morning, GLW opened at $27.68. So far today the stock has hit a low of $26.94 and a high of $27.68. As of 12:00, GLW is trading at $26.98, down 0.79 (-2.8%). The chart for GLW looks bullish and steady, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.

For a bearish hedged play on this stock, I would consider a July bear-call credit spread above the $30 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 6.4% return in nine weeks as long as GLW is below $30 at July expiration. Corning would have to rise by more than 10% before we would start to lose money. Learn more about this type of trade here.