Danaher (NYSE: DHR - option chain) shares have moved higher today after the company said its fourth-quarter profit fell 4.5 percent to $305.7 million, or 92 cents per share, on revenue of $3.18 billion. DHR's adjusted profit of $1.11 per share beat analysts' projections of $1.03 per share on revenue of $3.08 billion. 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 DHR.DHR opened this morning at $53.40. So far today the stock has hit a low of $53.32 and a high of $57.12. As of 12:20, DHR is trading at $55.87, up $4.52 (8.8%). The chart for DHR looks neutral and S&P gives DHR 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 $45 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 6.4% return in just 8 weeks as long as DHR is above $45 at March expiration. Danaher would have to fall by more than 19% before we would start to lose money. Learn more about this type of trade here.
DHR hasn't been below $47 at all in the past year and has shown support around $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 DHR.
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