Walgreen Co (NYSE: WAG - option chain) shares are headed higher today after the company posted a second-quarter profit of $640 million, or 65 cents per share. WAG's adjusted profit of 69 cents per share beat analysts' estimates of 66 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 WAG.UPS opened this morning at $42.70. So far today the stock has hit a low of $42.40 and a high of $45.57. As of 12:40, UPS is trading at $44.69, up $2.27 (5.3%). The chart for WAG looks neutral and S&P gives WAG a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $20 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 and a half weeks as long as WAG is above $20 at July expiration. Walgreens would have to fall by more than 25% before we would start to lose money. Learn more about this type of trade here.
WAG hasn't been below $21 at all in the past year and has shown support around $23 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 WAG.
WAG hasn't been below $21 at all in the past year and has shown support around $23 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 WAG.
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Reader Comments (Page 1 of 1)
3-24-2009 @ 9:45PM
davis10oregon1 said...
THINK OF HOW MANY FAILED COMPANIES
MAY NOT HAVE FAILED JUST BY FOLLOWING
THIS FIRM`S BLUEPRINT TO SUCCESS OR EVEN A CLOSE MODEL.