Macro Risk Advisors' SPDR S&P 500 ETF Trust Hedge

Speaking on Bloomberg Markets, Pravit Chintawongvanich of Macro Risk Advisors shared with the audience a hedging strategy in SPDR S&P 500 ETF Trust SPY.

He said he isn't trying to call a top in the S&P 500, but in case that some people decide to take profits or the current euphoria decreases, he wants to use options to hedge from a possible decline.

Chintawongvanich wants to buy the March 215 put, sell three March 195 puts and buy two March 185 puts for $1.14. The strategy offers protection between $213.86 and $195. If the price of SPDR S&P 500 ETF Trust stays above $195, the hedge can maximally make a profit of $18.86. In case of a decline to $185 or lower, the trade is going to make a maximal loss of $1.14.