Smithfield Foods (NYSE: SFD) shares are falling after the company reported adjusted fourth-quarter profit of $2.4 million, or 1 cent per share, below analysts' expectations of 7 cents per share. Losses in the hog unit, blamed on high feed costs contributed to the big drop in earnings. 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 SFD.

After hitting a one-year high of $35.79 in July, the stock hit a one-year low of $23.75 in January. This morning, SFD opened at $29.10. So far today the stock has hit a low of $28.22 and a high of $29.35. As of 12:15, SFD is trading at $28.76, down 1.37 (-4.5%). The chart for SFD looks bullish and steady before today's drop, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $35 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 four and a half months as long as SFD is below $35 at October expiration. Smithfield would have to rise by more than 23% before we would start to lose money. Learn more about this type of trade here.

SFD hasn't been above $35 for more than a few days in the past year and has shown resistance around $32 recently. This trade could be risky if the cost of feed grains relax in the coming months, but even if that happens, this position could be protected by resistance SFD might have around $32, where it topped out last 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 SFD.