IntercontinentalExchange (NYSE: ICE - option chain) shares are rising today after the company reported its first-quarter profit fell 22% to $72.2 million, or 98 cents per share. ICE's adjusted profit of $1.09 per share beat analysts' estimates of $1.01 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 ICE.ICE opened this morning at $89.32. So far today the stock has hit a low of $89.32 and a high of $104.60. As of 10:50, ICE is trading at $101.90, up 11.47 (12.7%). The chart for ICE neutral and S&P gives ICE a neutral 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $70 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 a 5.3% return in just seven weeks as long as ICE is above $70 at June expiration. ICE would have to fall by more than 31% before we would start to lose money. Learn more about this type of trade here.
ICE hasn't been below $70 since mid-March and has shown support around $81 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 ICE.
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