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Walgreen's (WAG - option chain) stock is trading lower today after the company said its same-store sales fell 0.3 percent last month, the first monthly sales decline since February. According to the company, this dip in sales is due to WAG stocking fewer seasonal items, which is better than the alternative of shoppers just not buying anything. 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 WAG.This morning, WAG opened at $36.16. So far today the stock has hit a high of $37.29 and a low of $35.92. As of 12:00, WAG is trading at $36.84, down 16 cents(-0.5%). The chart for WAG looks neutral and S&P gives WAG a neutral 3 STARS (out of 5) hold ranking.
For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $41 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 two months as long as WAG is below $41 at April expiration. WAG would have to rise by more than 11% before we would start to lose money. Learn more about this type of trade here.
WAG hasn't been above $41 at all in the past year and has shown resistance around $39.50 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 WAG.
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