"I think the rallies are going to be sold," Andrew Keene said Wednesday on CNBC's "Trading Nation."
Despite the rally, Keene sees trouble in the charts, as by his work, the ETF that tracks the SPY is now "below its 20-day and 50-day moving averages" and are testing a "gap around $197." Said Keene, "I want to take advantage of the high volatility and play for a move lower."
Still, with options prices relatively high by a historical standard, Keene sees an opportunity to take advantage of swollen options prices and sell upside volatility. Specifically, Keene sold the September 197/198 call spread for a 35-cent credit. This is a mildly bearish strategy in which a trader will sell a call and then buy a higher strike call of the same expiration. The goal is for the stock, or in this case ETF, to fall below the strike that the trader is short by the expiration date.
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"I'm not making a huge call for a 10 or 20 percent move to the downside," said the founder of Keene on the Market. "But I do think that if we continue to rally, we will get sold."
The SPY was trading 2 percent higher early Thursday, at around $198.