AutoDesk (ADSK) higher on Q2 earnings

Posted Aug 14th 2009 12:30PM by Brent Archer
Filed under: Earnings Reports, Options, Technical Analysis

AutoDesk (NASDAQ: ADSK - option chain) shares are rising today after the company reported Q2 earnings of 0.05 per share and $10.5M. Excluding one-time items, this EPS was 0.24, above estimates of 0.19. 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 ADSK.

ADSK opened this morning at $25.21. So far today the stock has hit a low of $25.08 and a high of $25.61. As of 11:10, ADSK is trading at $25.30, up 1.10 (4.6%). The chart for ADSK looks neutral and S&P gives ADSK a neutral 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider an October 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 a 5.3% return in two months as long as ADSK is above $20 at October expiration. AutoDesk would have to fall by more than 20% before we would start to lose money.

ADSK has shown support around $21.50 recently.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in ADSK.

Tags: ADSK, AutoDesk, earnings, inthenews, Investors Observer, options