Intuit (INTU) jumps on Q3 earnings, buyback plan

Intuit (NASDAQ: INTU) shares are trading higher after INTU announced yesterday evening its third-quarter profits jumped 21% to $444.2 million on strong sales of its tax-preparation and accounting programs. The company posted earnings of $1.39 a share on revenue of $1.31 billion, beating analysts' expectations. Also of note was a new $600 million stock buyback plan. 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 INTU.

After hitting a one-year high of $33.10 in October, the stock hit a one-year low of $25.08 in March. INTU opened this morning at $27.81. So far today the stock has hit a low of $27.56 and a high of $29.29. As of 12:20, INTU is trading at $28.50, up $1.29 (4.7%). The chart for INTUlooks bullish and steady while S&P gives INTU a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider an October 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 a 19.0% return in just five months as long as INTU is above $25 at October expiration. Intuit would have to fall by more than 12% before we would start to lose money. Learn more about this type of trade here.