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Options Action: Protecting Your Portfolio

With global political uncertainties abounding, Mike Khouw of Cantor Fitzgerald on Wednesday explained how to use options to protect your portfolio.

The VIX is frequently cited as a "fear index," meaning it's a read on how people feel about the markets at the time. It's not, however, an indicator of how the market is going to behave in the future.

Over the course of the last 14 years, the VIX has typically been very low right before a crisis, Khouw explained. In 1997, for example, the VIX was at it's lows before Indonesia devalued its currency. It was at its highest around when the rescue packages started to happen, he said.

"We still live in a period of crisis," Khouw said. "Right now, the VIX is at a very low number that makes buying insurance inexpensive."

**MIKE'S SPY TRADE**
Buy SPY Dec. Quarterly 116 puts for $1.40 to protect your portfolio

To learn more about this trade, watch the video!

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Trader disclosure: On November 24, 2010, 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), (BX), (F); Terranova Owns (UPL), (C), (PEP), (OXY), (VRTS), (GS), (FCX), (POT), (IBM), (AAPL), (ORCL), (MCD), (NKE); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT):Adami’s wife works at Merck; Finerman owns (AAPL); Finerman’s firm owns (AVP); Finerman and Finerman’s firm owns (BBY); Finerman’s firm owns (CMI); Finerman owns (DYN); Finerman’s firm owns (M); Finerman and Finerman’s Firm owns (MSFT); Finerman's Firm Is Short (IJR); Finerman's Firm Is Short (MDY); Finerman's Firm Is Short (SPY); Finerman's Firm Is Short (IWM); Finerman's Firm Is Long S&P Puts; Finerman's Firm Is Long Russell Puts; Cortes owns (TSN); Cortes owns (K); Cortes is short (XLE); Cortes is short (UNP); Cortes is short the Canadian Dollar; Cortes is short the Euro; Cortes is short the Mexican Peso; Cortes is short the Australian Dollar; Cortes is long U.S. Treasuries

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 Deborah Weinswig
An employee of Citigroup is a trustee of (TGT)
An employee of Citigroup owns (JCP), (WMT)
Citigroup is a market maker in (M), (CVS), (COST)
Citigroup owns 1% of more of (SKS), (SVU)
Citigroup intends to seek, within the next three months, compensation for investment banking services from (KR), (WMT)
Within the past 12 months, Citigroup has acted as manager of an offering of securities of (TGT), (HD), (WMT)
Citigroup has received compensation for investment banking services provided within the past 12 months from (TGT), (HD), (KR), (SKS), (WMT)
Citigroup received compensation for products and services other than investment banking services from (M), (TGT), (HD), (JCP), (KSS), (KR), (SWY), (WAG), (WMT), (COST) in the past 12 months.
Citigroup had within the past 12 months (TGT), (HD), (KR), (SKS), (WMT) as an investment-banking client.
Citigroup had within the past 12 months, the following as clients, and the services provided were non-investment-banking, securities related (M), (TGT), (CVS), (HD), (JCP), (KSS), (KR), (SWY), (SKS), (SVU), (WMT), (WAG), (COST)
Citigroup had within the past 12 months, the following as clients, and the services provided were non-investment-banking, non securities-related (M), (TGT), (HD), (JCP), (KSS), (KR), (SWY), (SVU), (WAG), (WMT), (COST)

For Jesse Eisinger
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