Microsemi (NASDAQ: MSCC - option chain) shares have jumped higher today after the company's board said it will review CEO James Peterson's academic credentials, but that it supports him and does not plan to change his role in the company. The review is in response to reports that Peterson misrepresented his degrees from Brigham Young University. 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 MSCC.MSCC opened this morning at $11.85. So far today the stock has hit a low of $11.75 and a high of $13.10. As of 12:45, MSCC is trading at $12.87, up $1.54 (13.6%). The chart for MSCC looks bullish and S&P gives MSCC a positive 4 STARS (out of 5) buy ranking.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $10 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 8.7% return in just six weeks as long as MSCC is above $10 at January expiration. Microsemi would have to fall by more than 22% before we would start to lose money. Learn more about this type of trade here.
MSCC hasn't been below $10 at all in the past year and has shown support around $10.30 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 MSCC.
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