Nokia (NYSE: NOK - option chain) shares are rising today after the company unveiled its new Nokia Booklet 3G mini-laptop. The device uses Microsoft's (NASDAQ: MSFT) Windows software, Intel's (NASDAQ: INTC) Atom processor, and will be a "full-function" personal computer with high-speed mobile Internet access capability. 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 NOK.NOK opened this morning at $12.73. So far today the stock has hit a low of $12.66 and a high of $12.87. As of 12:20, NOK is trading at $12.65 up16 cents (1.3%). The chart for NOK looks neutral and S&P gives NOKa 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 $11 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 three and a half months as long as NOK is above $11 at October expiration. Nokia would have to fall by more than 13% before we would start to lose money. Learn more about this type of trade here.
NOK has not been below $11 since March and has shown support around $12 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 NOK. He does own and control bullish hedged positions in MSFT and INTC.
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