Filed under: Deals, Good news, Options, Technical Analysis

Ryder System (NYSE: R) shares are trading higher after the company announced it would acquire the assets of Miami-based truck leasing company Gator Leasing Inc. Ryder will get Gator Leasing’s truck fleet of about 2,300 trucks and about 300 contract customers. 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 R.

After hitting a one-year high of $65.69 in April, the stock hit a one-year low of $38.95 in November. R opened this morning at $61.04. So far today the stock has hit a low of $60.43 and a high of $62.58. As of 3:15, R is trading at $62.14, up 1.53 (2.5%). The chart for R is bullish but slightly deteriorating while S&P gives R a positive 4 STARS (out of 5) purchase rating.

For a bullish hedged play on this stock, if one were to invest in it, I would think about a Might bull-put credit spread below the $55 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 leverages nice returns. For this particular trade, we will make a 4.2% return in just five weeks as long as R is above $55 at May expiration. Ryder would have to fall by more than 15% before we would begin to lose money. Learn more about this type of trade here.

R hasn’t been below $55 since February has shown support around $62 recently. This trade could be risky if the company’s earnings (due out on 4/23) disappoint, but even if that happens, that position could be protected by support the stock might find just above $45, where it bounced in March.

Brent Archer is an options analyst and writer at Investors Observer.