Mobile Telesystems (NASDAQ: MBT - option chain) shares are soaring higher today after the company announced its board approved buying back 11.1 billion rubles ($452 million) worth of shares. 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 MBT.MBT opened this morning at $68.18. So far today the stock has hit a low of $67.55 and a high of $70.54. As of 12:35, MBT is trading at $69.22, up $3.08 (4.7%). The chart for MBT looks neutral and S&P gives MBT a neutral 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $60 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 three weeks as long as MBT is above $60 at September expiration. MBT would have to fall by more than 13% before we would start to lose money. Learn more about this type of trade here.
MBT hasn't been below $60 at all in the past year and has shown support around $64 recently.
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 MBT.
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