S&P500 ETF (SPY) – Buy Market Insurance – Nov 18th, 2019
Bearish – SPY $311.79 – S&P 500
The S&P 500 (SPY) made a break above its major $302.50 resistance level last week and has continued to climb since. Markets have been propelled higher on the potential trade war resolution, lowered corporate profit expectations and a lower interest rate. Markets may continue higher but have now reached overbought with an increased risk of a short-term pullback.
XLY Trade Idea:
On CNBC’s OptionsAction show on Friday, Carter Worth suggested that the market is at risk of a pullback by analyzing VIX. The VIX has been settling back near its all-time low and net short positions provide a catalyst of a move higher. Expecting the markets to move lower on a volatility explosion, Michael Khouw suggests buying a Jan 300/280 Put Vertical @ $2.15. As of Friday’s close, these calls were trading at $2.02. OptionsPlay suggests managing risks by cutting losses if the price of the option falls to about $1.01.
We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. You can also view the Options Action’s video by clicking on the following link: SPY OptionsAction Trade