Melissa Lee's SPDR S&P 500 ETF Trust Trade

On CNBC's Options Action, Melissa Lee and Carter Worth teamed up to offer a bearish trading idea in SPDR S&P 500 ETF Trust SPY.

Worth showed a chart with a performance of major indexes. He explained that the S&P 500 performed much better than iShares Russell 2000 Index (ETF) IWM, iShares MSCI EAFE Index Fund (ETF) EFA and NASDAQ Global and said it would be reasonable to expect a pull back in the S&P 500.

Carter Worth thinks that there is a correlation between iShares iBoxx $ High Yid Corp Bond (ETF) HYG and the S&P 500. He said that since beginning in 2009, the bull market draw downs in the HYG have occurred just at the same time S&P 500 had a draw down. He thinks that the trend in HYG is broken now and he expects SPDR S&P 500 ETF Trust to deteriorate around 10 percent to $178.

Melissa Lee recommended a purchase of a put spread in SPDR S&P 500 ETF Trust. Specifically, she wants to buy the November 193 put for $2.40 and sell the November 178 put for $0.65. This put spread would cost her $1.75, which is her maximal loss. She can maximally gain $13.25 with this trade and her profits are capped at $178.