Valero Energy Corp. (NYSE: VLO) opened at $63.60. So far today the stock has hit a low of $62.93 and a high of $64.00. As of 11:00, VLO is trading at $63.50, down $1.09 (-1.7%).

After hitting a one year high of $78.68 in July, the stock fell hard as oil prices have been retreating over the past few weeks. Oil prices are slipping further today, as fears about storm damage in the Gulf of Mexico area are waning, bringing oil stocks down as well. Technical indicators for VLO are bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $80 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk and leverage returns. For this particular trade, we will make a 4.2% return in just 2 months as long as VLO is below $80 at October expiration. VLO would have to rise by 26% before we would start to lose money.

VLO has not been above $80 ever and has shown some resistance around $67.50 recently. This trade could be risky if crude prices spike higher due to tropical storms or unrest in the Middle East, but even if that happens, VLO could have trouble going higher than $78 where it topped in July.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Brent neither owns nor controls positions in VLO.