Abercrombie & Fitch (NYSE: ANF) shares have been slipping some of late. Recent insider selling is also flashing a warning for this stock. Over the past three months, insiders have sold $59.0 miilion worth of ANF stock. Insider selling has slowed its pace over the past few months, but it is still happening. A filing released on Saturday indicated that a director at the company sold 7800 shares of ANF, valued at over $500,000. 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 ANF.

After hitting a one-year high of $85.77 in October, the stock hit a one-year low of $66.05 in January. This morning, ANF opened at $72.72. So far today the stock has hit a low of $70.50 and a high of $72.72. As of 12:25, ANF is trading at $70.70, down $1.90 (-2.6%). The chart for ANF looks bullish but deteriorating, while S&P gives the stock a very positive 5 STARS (out of 5) strong buy rating.

For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $85 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. This particular trade will make a 6.4% return in three months as long as ANF is below $80 at August expiration. ANF would have to rise by more than 21% before we would start to lose money.

ANF hasn't been above $85 by more than a few cents at all in the past year and has shown resistance around $78 recently. This trade could be risky if the company's earnings (due out in on 8/15) are a positive surprise, but even if that happens, this position could be protected by resistance ANF might find at its 200 day moving average, which is currently around $77.

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