This morning, IMAX opened at $15.99. So far today the stock has hit a high of $16.20 and a low of $15.31. As of 11:55, IMAX is trading at $16.05, down $0.85 (-5.0%). The chart for IMAX looks bearish.
For a bearish hedged play on this stock, I would consider a September bear-call credit spread above the $22.50 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 8.7% return in four months as long as IMAX is below $22.50 at September expiration. IMAX would have to rise by more than 39% before we would start to lose money. Learn more about this type of trade here.
IMAX hasn't been above $21.30 at all in the past year and has shown resistance around $20 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 IMAX nor DWA.