After leading the market to records earlier this year, FANG stocks have taken a turn for the worse.
A swing from growth stocks to value has hit Facebook, Amazon, Netflix and Google parent Alphabet hard, dragging the stocks deep into a correction, or in some cases a bear market.
While the FANG stocks remain far from all-time highs, options activity still has a bullish lean, says Alon Rosin, head of institutional equity derivatives at Oppenheimer.
With "the FANGs we are seeing more bullish type of replacements," Rosin said on CNBC's "Trading Nation" on Tuesday. "We are seeing a lot of investors long FANGs. They don't want to take tax gains. They've been owning it forever so we are seeing selling calls to buy puts as a way to lock in gains without selling your stock."
One of those FANG names could rally back, says Rosin, and he is employing a bullish strategy to take advantage.
"Amazon is a good one. It's one of the few names that people want to own, they want to buy the dips, clearly it's gone down with the growth sell-off," said Rosin.
Rosin is selling a $1,420 put, the level that offered support on Nov. 20, and buying a $1,620 to $1,700 call spread with expiration on Jan. 11.
"You're paying no debit for that, that's costless so you'll own the stock about 10 percent lower if we continue lower or you'll have a nice upside profile as a way to own the stock," explained Rosin.
In this strategy, Rosin is targeting a move to the higher strike call of $1,700 by Jan. 11. If Amazon shares were to continue to sell off, Rosin would have to get long the stock at the strike of the put he is short, or $1,420.
As for the rest of the market, Rosin says he is not seeing the type of activity that would indicate the bottom is in yet.
"When we've seen the capitulation in the past you've seen spikes, you've seen volatility spike," Rosin said. "This orderly type of selling, the fact that we keep selling off on every rally, the dips are not getting, we're seeing a bit of a buyer strike."
The is down 12 percent in the past three months, pulling the benchmark index into negative territory for the year. It is in a correction having fallen 13 percent from records in September.
