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PPG Industries (NYSE: PPG - option chain) shares are rising today after the company reported a second-quarter profit of $146 million or 89 cents per share. Excluding one-time items, PPG earned 91 cents per share, topping analysts' forecasts of 75 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 PPG.PPG opened this morning at $47.15. So far today the stock has hit a low of $47.10 and a high of $49.50. As of 11:25, PPG is trading at $48.59 up $2.49 (5.4%). The chart for PPG looks bullish and S&P gives PPG a positive 5 STARS (out of 5) strong buy ranking.
For a bullish hedged play on this stock, I would consider a November bull-put credit spread below the $35 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 6.4% return in just four months as long as PPG is above $35 at November expiration. PPG would have to fall by more than 27% before we would start to lose money.
PPG has not been below $35 since March and has shown support around $41 recently.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in PPG.
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