Hologic (NASDAQ: HOLX - option chain) shares have moved higher today after the company upped its first-quarter EPS forecast by a penny to 30 cents to 31 cents. Analysts were expecting EPS of 29 cents. Not many companies ave been able to revise forecasts higher recently, so 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 HOLX.HOLx opened this morning at $12.10. So far today the stock has hit a low of $11.70 and a high of $13.95. As of 12:15, HOLX is trading at $13.05, up $2.15 (19.7%). The chart for HOLX looks neutral and S&P gives HOLX a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $10 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 13.6% return in just two months as long as HOLX is above $10 at March expiration. Hologic would have to fall by more than 23% before we would start to lose money. Learn more about this type of trade here.
HOLX hasn't been below $10 at all in the past year and has shown support around $10.50 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 HOLX.
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