AOL opened this morning at $21.56. So far today the stock has hit a low of $21.55 and a high of $22.34. As of 12:20, AOL is trading at $22.18 up 0.96 (4.5%). The chart for AOL looks bearish.
For a bullish hedged play on this stock, I would consider an April bull-put credit spread below the $20 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 two months as long as AOL is above $20 at April expiration. AOL would have to fall by more than 9% before we would start to lose money. Learn more about this type of trade here.
AOL has not been below $32.50 at all since the summer and has shown support 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 AOL, but obviously he provides content for their BloggingStocks page.