Mike Khouw's SPDR S&P 500 ETF (SPY) Trade

Mike Khouw talked on CNBC's Options Action about an options strategy that can protect your position from a possible decline. He suggested that the best way to get a protection is with a put spread in SPDR S&P 500 ETF SPY.

Specifically, Mike Khouw wants to buy the June 130 puts in SPDR S&P 500 ETF (SPY) for $5.65, and sell the June 120 puts for $2.75. This trade would cost him $2.90, and he would get protection below $127.10.

SPDR S&P 500 ETF (SPY) fell 0.79% today, and it closed at $131.43.