Genzyme (NASDAQ: GENZ - option chain) shares are headed higher today after the company reported a fourth-quarter profit this morning of $1.04 per share on revenue of $1.17 billion, beating analysts' projections of $1.02 per share on revenue of $1.18 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 GENZ.GENZ opened this morning at $72.47. So far today the stock has hit a low of $71.23 and a high of $73.41. As of 11:40, GENZ is trading at $71.95, up 76 cents (1.1%). The chart for GENZ looks bullish and S&P gives GENZ a positive 5 STARS (out of 5) strong buy ranking.
For a bullish hedged play on this stock, I would consider an April 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 an 8.7% return in just two months as long as GENZ is above $60 at April expiration. GENZ would have to fall by more than 16% before we would start to lose money. Learn more about this type of trade here.
GENZ hasn't been below $60 at all in the past year except for two days in December and has shown support around $68 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 controls bullish hedged positions in GENZ.
GENZ hasn't been below $60 at all in the past year except for two days in December and has shown support around $68 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 controls bullish hedged positions in GENZ.
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