Walmart's New Health Food Push: Is It Too Hard to Swallow?
Bonds Are a 'Safe' Investment: A Big Lie Gets Even Bigger
American Express (NYSE: AXP - option chain) shares are soaring higher today after the company reported a first-quarter profit of $361 million or 31 cents per share. AXP's adjusted profit came in at 32 cents per share, beating analysts' forecasts of 12 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 AXP.AXP opened this morning at $22.69. So far today the stock has hit a low of $22.05 and a high of $24.10. As of 11:25, AXP is trading at $23.74, up $2.77 (13.2%). The chart for AXP looks bearish and S&P gives AXP a negative 2 STARS (out of 5) sell ranking.
For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $17 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 11.1% return in just two months as long as AXP is above $14 at June expiration. American Express would have to fall by more than 28% before we would start to lose money.
AXP has shown support around $18 recently.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in AXP.
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
