JCPenney (NYSE: JCP) shares are trading higher after Polo Ralph Lauren (NYSE: RL) announced that its fourth-quarter profit jumped 41% to $1 a share, well above analysts' estimates of 65 cents per share. RL's results were helped by the launch of the American Living line at JCP, which shows that shoppers are still buying at department stores. Also, other positive retail results from stocks like Dollar Tree (NASDAQ: DLTR) are also lending a hand. 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 JCP.

After hitting a one-year high of $82.49 in June, the stock hit a one-year low of $33.27 in January. JCP opened this morning at $41.16. So far today the stock has hit a low of $40.68 and a high of $42.18. As of 1:00, JCP is trading at $40.91, up $0.41 (1.0%). The chart for JCP looks bullish but deteriorating, 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 an August bull-put credit spread below the $30 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 5.3% return in just three months as long as JCP is above $30 at August expiration. JCP would have to fall by more than 27% before we would start to lose money.

JCP hasn't been below $33 at all in the past year and has shown support around $38 recently. This trade could be risky if the company's earnings (due out in mid August) disappoint, but even if that happens, this position could be protected by the support the stock might find around $28, where it bottomed out in March and April.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in JCP, RL, or DLTR.