MetLife (NYSE: MET - option chain) stock is falling today after the company announced a first-quarter loss of $574 million, or 71 cents per share. Excluding one-time items, MET earned 20 cents per share during the quarter, missing analysts' estimates of 34 cents per share. The company was hurt during the quarter by a loss on investments of $618 million and a 24 percent declined in quarterly investment income. 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 MET.This morning, OSK opened at $28.81. So far today the stock has hit a low of $27.08 and a high of $28.94. As of 11:55, MET is trading at $27.67, down $2.08 (-7.0%). The chart for MET looks bullish and S&P gives MET a positive 4 STARS (out of 5) buy ranking.
For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $35 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 an 11.1% return in seven weeks as long as MET is below $35 at June expiration. MetLife would have to rise by more than 26% before we would start to lose money. Learn more about this type of trade here.
MET hasn't been above $35 since early January and shown resistance around $31 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 MET.
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