Good News for Adobe: Apple Allows Flash on Devices

ADBE opened this morning at $31.90. So far today the stock has hit a low of $31.30 and a high of $32.87. As of 12:10, ADBE is trading at $32.54 up $3.23 (11.0%). The chart for ADBE looks bullish and S&P gives ADBE a positive 5 STARS (out of 5) strong buy ranking.

For a bullish hedged play on this stock, I would consider a January 2011 bull-put credit spread below the $25 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 10.1% return in four and a half months as long as ADBE is above $25 at January expiration. Adobe would have to fall by more than 23% before we would start to lose money. Learn more about this type of trade here.

ADBE has not been below $26 at all in the past year and has shown support around $29 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 ADBE nor AAPL.