rtp

CME Group (NASDAQ: CME - option chain) is one of the few stocks rising today after an article in the latest Barron's called CME one of its top picks to weather the current storm, because it can generate a lot of cash in a tight credit environment. Even if CME doesn't rise in the next few months, this kind of sentiment could help the stock at least maintain its current price. 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 CME.

CME opened this morning at $358.00 So far today the stock has hit a low of $353.63 and a high of $384.99. As of 12:35, CME is trading at $371.00, up $8.70 (2.4%). The chart for CME looks neutral and S&P gives CME a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $280 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 6.5% return in just two weeks as long as CME is above $280 at October expiration. CME would have to fall by more than 24% before we would start to lose money. Learn more about this type of trade here.

CME hasn't been below $282 at all in the past year and has shown support around $350 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 CME.

Family Dollar (NYSE: FDO - option chain) shares are rising today after the company posted a fourth-quarter profit of $53.2 million, or 38 cents per share, beating analysts' estimates of 34 cents per share. Discount stores have been one of two industries that have posted gains in the past year, alongside the typically defensive household goods industry. Today's earnings reinforce the idea that these companies are strong bets in weak economic times. 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 FDO.

FDO opened this morning at $25.35. So far today the stock has hit a low of $25.23 and a high of $26.05. As of 12:25, FDO is trading at $25.18, up $1.19 (4.9%). The chart for FDO looks neutral and S&P gives FDO a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $17.50 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 three and a half months as long as FDO is above $17.50 at January expiration. Family Dollar would have to fall by more than 30% before we would start to lose money. Learn more about this type of trade here.

FDO hasn't been below $17.50 since January and has shown support around $23.50 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 FDO.

Hewlett-Packard (NYSE: HPQ - option chain) shares are falling today after the computer giant announced it has agreed to purchase LeftHand Networks, a small Colorado firm specializing in data storage. Companies are generally depressed when they make acquisitions, but often times an economic downturn offers a great opportunity to expand. If you think that the stock won't fall by too much, then now could be a good time to look at a bullish hedged trade on HPQ.

HPQ opened this morning at $44.27. So far today the stock has hit a low of $41.95 and a high of $44.30. As of 12:10, HPQ is trading at $43.00, down $1.95 (4.4%). The chart for HPQ looks neutral and S&P gives HPQ a very positive 5 STARS (out of 5) strong buy ranking.

For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $37.50 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 5.3% return in just two weeks as long as HPQ is above $37.50 at October expiration. Hewlett-Packard would have to fall by more than 13% before we would start to lose money. Learn more about this type of trade here.

HPQ hasn't been below $39.99 at all in the past year and has shown support around $41 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 controls a bullish hedged position in HPQ.

Oracle (NASDAQ: ORCL - option chain) shares are dropping along with much of the overall market. Today the company announced it would acquire Advanced Visual Technology, but what I am looking at is the recent insider activity on ORCL, which indicates that one of the company's president's, Safra Catz, exercised 500K of stock options and almost immediately sold the stock for about $10 million about two weeks ago at a price near $20 per share.

Oracle has tumbled over the past month or so, and if those in the know are still selling at $3 less than recent August prices, then that is ringing some alarm bells for me. Granted, insider activity is not a perfect indicator, since he might have had needed cash for some reason, but if Ms. Catz thought the stock would be rising in the next few weeks, then she probably would have waited to sell, right? If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on ORCL.

This morning, ORCL opened at $20.19. So far today the stock has hit a low of $19.55 and a high of $20.19. As of 12:15, ORCL is trading at $19.78, down $0.53 (-2.6%). The chart for ORCL looks bearish and S&P gives ORCL a very positive 5 STARS (out of 5) strong buy ranking.

For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $21 range.

Goldman Sachs (NYSE: GS - option chain) shares are rising today as the markets bounce back from yesterday's bloodbath and the company announces that is is looking to buy up to $50 billion in assets as a way to become a major player in the banking industry now that it is a bank holding company. 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 GS.

GS opened this morning at $126.89. So far today the stock has hit a low of $124.50 and a high of $129.00. As of 12:45, GS is trading at $127.38, up $6.68 (5.5%). The chart for GS looks bearish and S&P gives GS a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider a November bull-put credit spread below the $50 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 6.4% return in just eight weeks as long as GS is above $50 at November expiration. Goldman would have to fall by more than 60% before we would start to lose money. Learn more about this type of trade here.

DirecTV (NYSE: DTV - option chain) shares are basically flat today, but with today's market that is great performance. The company announced a deal Friday after the close that DTV and AT&T Inc. (NYSE: T) will launch a co-branded satellite television service that will be available to AT&T customers beginning after T's current deal with Dish Network (NASDAQ: DISH) expires early next year. Terms of the deal were not disclosed, but this is a big move for the smaller company and DISH is down more than 13% currently. 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 DTV.

DTV opened this morning at $26.05. So far today the stock has hit a low of $26.05 and a high of $27.30. As of 12:25, DTV is trading at $26.54, down one cent (-0.04%). The chart for DTV looks neutral and S&P gives DTV a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider an November bull-put credit spread below the $22.50 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 just eight weeks as long as DTV is above $22.50 at November expiration. Direct TV would have to fall by more than 14% before we would start to lose money. Learn more about this type of trade here.

DTV hasn't been below $22.50 since February and has shown support around $24.50 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 DTV nor DISH, but he does control a bullish hedged position on T.

McDonald's (NYSE: MCD - option chain) announced yesterday evening that it was increasing its dividend payout from 0.375 per share to 0.50 per share. If you think that the company 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 MCD, and a covered call should also allow you rake in the dividend in late November or early December.

MCD opened this morning at $62.05. So far today the stock has hit a low of $62.05 and a high of $62.99. As of 12:55, MCD is trading at $62.54, up 27 cents (0.4%). The chart for MCD looks neutral and S&P gives MCD a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider a January covered call at the $65 level. A covered call is an options position that combines the purchase of stock with the sale of call 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 8.6% return in just 4 months if MCD is above $65 at January expiration. If it isn't above $65, then we just get a free 2.60 per share. (I it a bonus dividend) McDonald's would have to fall by more than 4% before we would start to lose money. Learn more about this type of trade here.

MCD has not been below $60 (the break-even point) since early August and has shown support around $61 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 owns and controls a long hedged position in MCD.

McCormick (NYSE: MKC - option chain) shares are pretty much flat today after the company reported Q3 earnings that came in at 0.50, 2 cents higher than analyst estimates. Sales beat estimates as well, but the stock is not really moving since some of the EPS benefits were from the sale of one of their brands. Last night, CNBC analyst and BloggingStocks contributor Jim Cramer also mentioned this stock as a potential buy on his TV show if it gets depressed by losses in the broader market. 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 MKC.

MKC opened this morning at $39.63. So far today the stock has hit a low of $38.16 and a high of $39.64. As of 12:10, MKC is trading at $38.71, up 21 cents(0.5%). The chart for MKC looks neutral and S&P gives MKC a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider a December covered call at the $40 level. A covered call is an options position that combines the purchase of stock with the sale of call 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 6.0% return in just 3 months if MCK is above $40 at December expiration. If it is below $40, then we picked up a free $1.10 per share by selling the call. Plus, MKC pays a small dividend that we will receive if we hold the stock on 10/01. McCormick would have to fall by more than 3% before we would start to lose money. Learn more about this type of trade here.

MKC hasn't been below $37.75 (our break-even point) since July and has shown support around $38 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 MKC.

First Solar (NASDAQ: FSLR - option chain) shares are rising today with other solar stocks after the US Senate approved a tax bill yesterday afternoon that extended $18 billion worth of tax credits to producers of alternative energy, including wind and solar power. 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 FSLR.

FSLR opened this morning at $220.80. So far today the stock has hit a low of $218.02 and a high of $229.39. As of 12:45, FSLR is trading at $225.32, up $14.43 (6.8%). The chart for FSLR looks bullish and S&P gives FSLR a positive 4 STARS (out of 5) buy ranking.

For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $170 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 7.5% return in just three weeks as long as FSLR is above $170 at October expiration. First Solar would have to fall by more than 24% before we would start to lose money. Learn more about this type of trade here.

Lennar (NYSE: LEN - option chain) shares are falling today after the company reported had significantly smaller losses in this year's third quarter this year than last. EPS missed estimates by four cents but revenues beat estimates as cost-cutting measures helped the bottom line. Even as revenues were less than half of last year's figure, the EPS went from a 3.25 loss to just 0.56 per share. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on LEN or one of the other home-builders that has yet to report.

This morning, LEN opened at $13.60. So far today the stock has hit a low of $12.95 and a high of $14.30. As of 1:00, LEN is trading at $12.95, down $0.79 (-5.8%). The chart for LEN looks bullish and S&P gives LEN a neutral 3 STARS (out of 5) hold ranking.

For a bearish hedged play on this stock, I would consider a November bear-call credit spread above the $17.50 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 nine weeks as long as LEN is below $17.50 at November expiration. Lennar would have to rise by more than 34% before we would start to lose money. Learn more about this type of trade here.

AutoZone (NYSE: AZO - option chain) shares opened higher this morning, but are virtually unchanged as of midday after the company reported fourth quarter earnings that missed estimated by 2 cents ($3.88 vs $3.90). Profits rose 12% year over year, including a 0.6% increase in same store sales, but this was partially attributed to a quarter that was one week longer. However, with the current shaky economy, this stock did pretty well, so it might be a safe place to invest. 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 AZO.

AZO opened this morning at $128.00. So far today the stock has hit a low of $127.69 and a high of $134.14. As of 12:20, AZO is trading at $131.00, up 21 cents (0.2%). The chart for AZO looks bullish and S&P gives AZO a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $100 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 5.3% return in three months as long as AZO is above $100 at December expiration. AutoZone would have to fall by more than 23% before we would start to lose money. Learn more about this type of trade here.

AZO hasn't been below $100 at all in the past year and has shown support around $115 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 AZO.

Baidu.com (NASDAQ: BIDU - option chain) shares are diving today after the Wall Street Journal reported that speculation is rampant in China that the internet-search company accepted payments from dairy companies to keep negative items from appearing in its search results. BIDU admits that several dairy companies had approached the company, but says it refused all offers to screen negative news. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on BIDU.

This morning, BIDU opened at $280.50. So far today the stock has hit a low of $201.15 and a high of $311.30. As of 1:05, BIDU is trading at $293.90, down $11.35 (-3.7%). The chart for BIDU looks neutral and S&P gives BIDU a 3 STARS (out of 5) hold ranking.

For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $360 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 5.3% return in 4 weeks as long as BIDU is below $360 at October expiration. Baidu would have to rise by more than 23% before we would start to lose money. Learn more about this type of trade here.

BIDU hasn't been above $360 at since May and has shown resistance around $325 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 BIDU.

Honda Motor (NYSE: HMC - option chain) shares are slightly higher today after a US executive said that despite expected weaknesses in the U.S. auto market, HMC should be able to achieve a slight increase in sales in 2009 on the strength of its hybrid and fuel efficient models. This is good news for the company, but not that great, since recent sales the past few years have not been so hot. The slight growth will be compared to a lower baseline, but it is still better than a sales decline. 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 HMC.

HMC opened this morning at $30.06. So far today the stock has hit a low of $30.00 and a high of $31.18. As of 12:35, HMC is trading at $30.05, up 0.05 (0.2%). The chart for HMC looks bearish and S&P gives HMC a negative 2 STARS (out of 5) sell ranking.

For a bullish hedged play on this stock, I would consider a January 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 16.3% return in just four months as long as HMC is above $25 at January expiration. Honda would have to fall by more than 16% before we would start to lose money. Learn more about this type of trade here.

HMC hasn't been below $27 at all in the past year and has shown support around $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 HMC.

Wachovia Corp. (NYSE: WB - option chain) shares are falling today with most other financial stocks, but we uncovered some interesting insider activity from this week. On Monday, a director at WB bought one million shares for $11.00. This cost him $11 million and could be interpreted as a sign that the stock is probably not going to go away any time soon. However, it is also a good idea to note that the same director bought 500,000 shares last winter at $38, so he may also just be averaging his position downwards. Either way, if you think that the stock won't fall by too much more in the coming months, then now could be a good time to look at a bullish hedged trade on WB, since the put premiums will be high today.

WB opened this morning at $10.44. So far today the stock has hit a low of $8.50 and a high of $10.91. As of 12:55, WB is trading at $9.55, down $1.96 (17.0%). The chart for WB looks bearish and S&P gives the stock a 2 STARS (out of 5) sell ranking.

For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $5 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 39.9% return in just one month as long as WB is above $5 at October expiration. Wachovia would have to fall by more than 47% before we would start to lose money. Learn more about this type of trade here.

Goldman Sachs (NYSE: GS - option chain) shares are dropping today after the company announced its Q3 earnings this morning. While GS beat analyst estimates of 1.71 EPS by 10 cents, the 51% drop in revenues was larger than expected. The announcement was not an awful sign for GS, but with all the surrounding trouble in the financial sector, it was not what investors needed to see to send the stock higher. Currently, GS is well off its lows, but still down a significant chunk. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on GS.

This morning, GS opened at $118.00. So far today the stock has hit a low of $116.13 and a high of $135.00. As of 12:25, GS is trading at $130.98, down $4.52 (-3.3%). The chart for GS looks bearish, while S&P gives the stock a 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 $175 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 4.2% return in five weeks as long as GS is below $175 at October expiration. Goldman Sachs would have to rise by more than 33% before we would start to lose money. Learn more about this type of trade here.