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Options Action: Energy ETF

Tuesday, 9 Nov 2010 | 7:26 PM ET

With crude oil having snapped a 6-day winning steak Tuesday, is it time to cash out of energy or does the sector still have room to run?

If you ask options trader Scott Nations, one day does not make a trend. Besides, he said, there are too many good things helping out the space, including inflation. Tuesday's dip, therefore, is an opportunity to sell some put spreads instead of taking profits on the space all together.

Nations suggested using options with the Energy exchange-traded fund.

***SCOTT'S XLE TRADE***
Sell Dec 62 put at $1.65
Buy Dec 59 put at 65 cents

To learn more about this trade, watch the video.

Options Action
Profiting by selling a put spread on XLE, with Scott Nations.

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Trader disclosure: On November 9, 2010, the day this video was recorded, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova owns (AAPL) puts. Joe Terranova owns (FCX) puts. Joe Terranova owns (APA), (AAPL), (AXP), (C), (DIS), (FCX), (HES), (IBM), (ISRG), (MCD), (NKE), (ORCL), (PCP), (PEP) and (PFE). Guy Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC) and (MSFT). Tim Seymour owns (AAPL), (MOT) and (POT). Steve Cortes owns (TSN) and (K). Steve Cortes is short (PHM), (MAS) and (WY).

For Joe Terranova:
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CMS)
Virtus Investment Partners own more than 1% of (CSC)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (FCFS)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SOA)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (WMB)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DRYS)

For Guy Adami:
Adami’s wife works at Merck

BRIAN KELLY
Accounts managed by Kanundrum Capital own (TLT)
Accounts managed by Kanundrum Capital own (TIP)
Accounts managed by Kanundrum Capital own (JEF)
Accounts managed by Kanundrum Capital own (TD)
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (SLV)
Accounts managed by Kanundrum Capital own (CLF)
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (GPRE)
Accounts managed by Kanundrum Capital own (JJG)
Accounts managed by Kanundrum Capital own (HD)
Accounts managed by Kanundrum Capital own (PCL)
Accounts managed by Kanundrum Capital own (XHB)
Accounts managed by Kanundrum Capital own (FCX)
Accounts managed by Kanundrum Capital own (JO)
Accounts managed by Kanundrum Capital own (EWH)
Accounts managed by Kanundrum Capital own (MCP)
Accounts managed by Kanundrum Capital own (MOT)
Accounts managed by Kanundrum Capital own (HBC)
Accounts managed by Kanundrum Capital own (SWC)
Accounts managed by Kanundrum Capital own Euros
Accounts Managed By Kanundrum Capital own (POT) Calls
Accounts managed by Kanundrum Capital are short Japanese Yen

ANTHONY SCARAMUCCI
Scaramucci and SkyBridge Capital own (ADP)

RICHARD VOLPE
***No Disclosures***

COLIN SEBASTIAN
Lazard Capital Markets LLC makes a market in AKAM and NFLX securities

DAVID RIEDEL
***No Disclosures***

SCOTT NATIONS
***No Disclosures***

CNBC.com with wires.

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