Here's how to position your portfolio for the Fed: Trader

The Dow and S&P 500 fell again in early trading Friday after a mixed jobs report kept a Fed rate hike for this month on the table—U.S. unemployment hit a seven year low, but job creation fell short of expectations at 173,000 in August versus the 220,000 estimate.

With less than two weeks until the Fed meeting, one trader is positioning his portfolio for further volatility in the stock market.

Read MoreS&P hovers near correction; Dow plunges triple digits after jobs

"I think the trend here is down," Todd Gordon said Thursday on CNBC's "Trading Nation." Stocks have been bouncing in and out of positive territory since its initial selloff last week. "You don't want to be long here because we I think we are going to [continue] to roll over."

Looking at a chart of the SPY, the ETF that tracks the S&P 500, Gordon noted that "we have broken through key support at $204, which is now serving as resistance." For Gordon, even as stocks have found some rallies in recent sessions, this will be a difficult level for it to break though. The SPY was trading around $193 early Friday.

Read MoreAug jobs report highlights reason for recent stock drops: Paulsen

"I want to sell options above that resistance level as it will give me the highest probability of success," added Gordon, founder of Specifically, Gordon sold the SPY October 202/205 call spread for $1.09 credit. This is a bearish strategy in which a trader will sell a call and then buy a higher strike call of the same expiration. The goal is to have the stock, or in this case ETF, stay below the strike that you are short. Gordon's trade is profitable if the SPY remains below $202 by October expiration.

"I am confident in these resistance levels as reason to be short," he said.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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