Bulls looking to hedge their bets in the event of a post-earnings pullback should considering coupling the bought 12-strike call with a sold April 15 call, resulting in the initiation of a bullcallspread.
While the only risk associated with a bullcallspread is the net debt incurred by entering the position, there is a considerably higher risk assumed by selling the September 3.50 puts.
While the only risk associated with a bullcallspread is the net debt incurred by entering the position, there is a considerably higher risk assumed by selling the January 2012 12.50 puts.