American International Group (NYSE: AIG) shares are trading higher today after Citigroup upgraded the stock to "Buy" from "Hold," adding in a note that AIG is poised for well over 35% upside within the following year. 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 AIG.

After hitting a one-year high of $72.75 last June, the stock hit a one-year low of $31.05 yesterday. AIG opened this morning at $32.38. So far today the stock has hit a low of $31.97 and a high of $32.52. As of 12:00, AIG is trading at $32.37, up 0.85 (2.7%). The chart for AIG looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a July 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 4.2% return in just four weeks as long as AIG is above $25 at July expiration. AIG would have to fall by more than 23% before we would start to lose money.

AIG hasn't been below $31 at all in the past year but has broken below support levels recently. This trade could be risky if the financial markets continue to nose-dive, but even if that happens, this position could be protected by the fact that its next earnings are not scheduled until August, which is after expiration of the trade above.

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