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MetLife (MET - option chain) shares are rising today after the company reported earnings last night, posting a second-quarter profit of $1.5 billion, or $1.84 per share. MET's operating income came in at $1.23 per share on revenue of $12.83 billion. Analysts had forecast a profit of $1.00 per share on revenue of $13.05 billion. 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 MET.MET opened this morning at $41.25. So far today the stock has hit a low of $40.50 and a high of $47.75. As of 12:10, MET is trading at $41.95 up $1.75 (4.3%). The chart for MET looks bullish and S&P gives MET a positive 4 STARS (out of 5) buy ranking.
For a bullish hedged play on this stock, I would consider a September 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 7.1% return in seven weeks as long as MET is above $35 at September expiration. MetLife would have to fall by more than 16% before we would start to lose money. Learn more about this type of trade here.
MET has not been below $35 since February and has shown support around $39 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 MET.
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