Hasbro (NYSE: HAS - option chain) stock is falling today after competitor Mattel Inc. (NYSE: MAT) reported a fourth-quarter profit of $176.4 million, or 49 cents per share, missing analysts' estimates of 75 cents per share. This could be bad news for HAS, which reports earnings next Monday, February 9, before the open. Hasbro has beaten estimates each time for the past two years, but this is the first Christmas season since the economic pain has really been felt. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on KG.This morning, HAS opened at $22.47. So far today the stock has hit a low of $21.71 and a high of $22.55. As of 12:45, HAS is trading at $22.13, down $2.00 (-8.3%). The chart for HAS looks neutral and S&P gives HAS a 3 STARS (out of 5) hold ranking.
For a bearish hedged play on this stock, I would consider a July bear-call credit spread above the $30 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 five and a half months as long as HAS is below $30 at July expiration. Hasbro would have to rise by more than 35% before we would start to lose money. Learn more about this type of trade here.
HAS hasn't been above $30 since October and shown resistance around $27 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 HAS or MAT.
For a bearish hedged play on this stock, I would consider a July bear-call credit spread above the $30 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 five and a half months as long as HAS is below $30 at July expiration. Hasbro would have to rise by more than 35% before we would start to lose money. Learn more about this type of trade here.
HAS hasn't been above $30 since October and shown resistance around $27 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 HAS or MAT.
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