Fluor (NYSE: FLR - option chain) shares have soared higher today after the company reported a third-quarter profit of $183.1 million, or $1.01 per share, easily surpassing analysts' estimates of 91 cents per share. 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 FLR.FLR opened this morning at $38.85. So far today the stock has hit a low of $38.67 and a high of $43.99. As of 12:40, FLR is trading at $42.26, up $8.25 (24.2%). The chart for FLR looks bullish and S&P gives FLR a positive 4 STARS (out of 5) buy ranking.
For a bullish hedged play on this stock, I would consider a December 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 5.3% return in just six weeks as long as FLR is above $25 at December expiration. Fluor would have to fall by more than 40% before we would start to lose money. Learn more about this type of trade here.
FLR hasn't been below $28 at all in the past year and has shown support around $33 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 FLR.
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