How to buy protection amid a volatile earnings season

The market is in the midst of a volatile earnings season, with the technology sell-off front and center. One top strategist is laying out the ways investors can protect their portfolios if they're worried about further downside.

Here's what Stacey Gilbert, head of derivative strategy at Susquehanna, said Tuesday on CNBC's "Trading Nation."

· Investors might want to hedge large-cap portfolios as meaningful cracks appear in big tech names, stirring fears the tech sell-off could bleed into the broader market. Utilizing options can be useful for investors who are cautious but don't want to shed stocks now.

· Specifically, for investors who are looking for protection but are not necessarily afraid of a crash, buying a put spread on the S&P 500-tracking SPY ETF is one strategy to consider. This would begin protecting investors around 2.5 percent from current levels, and include selling a lower-strike put, about 10 percent below current levels, to reduce the cost of that exposure.

· An alternate strategy in using options to protect against more dramatic market downside would be purchasing an outright put on the SPY. This would be a 5 percent out-of-the-money put option on the SPY.

· Unlike the put spread strategy, buying an outright put may take a bit more of a market pullback to work effectively. In buying a put, there is no re-entry point, so if the market were to see a significant downside move, a portfolio is protected starting if the market falls 5 percent.

Bottom line: Investors may choose to protect their portfolios with "insurance" using different options strategies, according to Gilbert.

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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 CNBC and 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.

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