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Top trader buys downside protection, adds refiner

Joe Terranova
Scott Mlyn | CNBC

"Halftime Report " trader Joe Terranova believes investors may have gotten too complacent given the recent rally in stocks, prompting him to buy protection for his model portfolio.

"Volatility is ridiculously cheap," said Terranova, pointing to the CBOE Volatility Index, which is down nearly 40 percent in the past month.

Apart from a play on volatility, he scooped up shares of an energy name he believes is poised to rally.

So far this year, Terranova's stock picks in his model portfolio are up 11 percent, compared with a return of 5 percent for the .

Here's how he's positioning his portfolio for the days ahead: