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Options Action: SPY

Tuesday, 21 Sep 2010 | 5:54 PM ET

With bulls confident the market is about to break higher and bears positive it’s set to tumble, how should you trade?

Scott Nations of NationShares recommends a Nov 110 / 118 collar in the SPY for investors who are already long the underlying stock.

In other words, “buy the Nov. 110 put for 2.35 and sell a Nov. 118 call for 1.75 to help pay for that put,” he explains Holders are protected against any drop below 110 and get their SPY called away at 118. “The total cost is 0.60 which is about 1/2 of 1% of the SPY so it's cheap.”

Learn more about this trade. Watch the video now!

Options Action
Profiting from the SPY, with Scott Nations, NationsShares.




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Trader disclosure: On September 21st, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour owns (AAPL); Adami owns (AGU), (BTU), (NUE), (GS), (C), (INTC), (MSFT); Adami’s wife works at Merck; Terranova Owns (APA), (AAPL), (ARUN), (BMO), (C), (DO), (EOG), (FCX), (FTO), (XBI), (GS), (HES), (IBM), (JOYG), (MA), (NBR), (NOV), (OXY), (ORCL), (PEP), (POT), (RSH), (GLD), (SLB), (SU), (SPLS), (RIG), (UPL), (VRTS)

For Patty Edwards
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For Mark Mahaney
Citigroup Global Markets Inc. or an affiliate received compensation for products and services other than investment banking services from Amazon.com Inc in the past 12 Months.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, securities related: Amazon.com Inc.
Citigroup Global Markets Inc. currently has, or had within the past 12 months, the following as clients, and the services provided were non-investment-banking, nonsecurities- related: Amazon.com Inc.
Citigroup is a market maker in the publicly traded equity securities of Amazon.com
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SPY
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