Hedging Your Bets

With the market up in spite of the slowing economy, is it time for you to hedge some of your bets?

I recommend putting on protection, counsels Pete Najarian on CNBC’s Closing Bell. (In other words, buy put options or put spreads and give yourself a position to the downside.) The volatility index has plunged and is establishing new lows which allows you to buy puts or protection at relatively inexpensive prices.

Specific trades?

Look at any name that has moved substantially and now makes you feel as if there’s room for a pullback. You can look at indexes such as the SPDRsor the Oil Services HLDR as well as individual stocks such as Apple or First Solar, says Najarian.

What’s the bottom line?

I don’t see monster upside or downside in the current market, Najarian says. I just see a progressive steady run higher with some pitfalls along the way and investors who can’t stomach the drops should buy put protection.

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Trader disclosure: On Apr .7, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (YHOO), (MSFT); Pete Najarian Owns (AAPL), (NOK), (YHOO), (NVS), (XLF); Pete Najarian Owns (AA) Calls, (CHK) Calls, (MSFT) Calls, (BHI) Calls; Finerman Owns (GS); Finerman's Firm And Finerman Own (CROX); Finerman's Firm Owns (FLS), (MSFT), (YHOO); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM)