Freddie Mac (NYSE: FRE)

After hitting a one-year high of $67.68 last June, the stock hit a one-year low of $16.59 in March. This morning, FRE opened at $25.29. So far today the stock has hit a low of $24.31 and a high of $25.57. As of 1:00, FRE is trading at $24.44, down $1.00 (-3.9%).

Market Sentiment: Bearish

FRE chart is shows that market is trending lower. The reasons are:

• Price is making higher lows and lower highs.
• Trading below 100 moving average.
• Bollinger bands have been squeezed.
  
• A congregation zone is forming with 20MA, 50MA and 100MA.

Because this stock looks bearish, it is a good time to consider a July bear-call credit spread above the $30 range. This particular trade will make a 7.5% return in seven weeks as long as FRE is below $30 at July expiration. This trade could be risky if the housing situation suddenly ameliorates, but even if that happens, this position could be protected by resistance FRE might find around $28, where it has topped out quite a few times over the past two months.
DISCLOSURE: This is just for your education purpose. We are not responsible for any of your losses. Please do at your own risk.