Joe Tigay's Health Care SPDR ETF Options Trade

Joe Tigay of Equity Armor Investments shared with the viewers of Bloomberg Markets his view on the healthcare sector. He thinks there is a political risk in the sector after the President-elect Donald Trump said drug prices should be more competitive. The repeal and replacement of the Obamacare is also a risk that could bring volatility to the sector.

Tigay thinks it would be a good idea to protect his healthcare portfolio, while he remains cautiously optimistic. He wants to use options in Health Care SPDR (ETF) XLV to set up a hedge. Specifically, he wants to buy the March 70/65 put spread for $1.16. The trade breaks even at $68.84 or 2.84 percent below the current market price and it can maximally make a profit of $3.84.

Health Care SPDR (ETF) gained 0.10 percent on Thursday.