Dan Nathan's JPMorgan Chase Trade

Ahead of an important Fed meeting, Dan Nathan spoke on CNBC's Options Action about the financial space and he shared a bearish options strategy as a way to trade the sector on the event. Nathan believes that the rally in the financial space should be over because the banks had really poor results in Q4 and a possibility of higher interest rates is already priced in. He presented a chart which shows that 50-day moving average is crossing below 200-day moving average in JPMorgan Chase & Co. JPM. Nathan sees that as a bearish sign and he wants to buy a put spread in the name. Specifically, Nathan wants to buy the April 60 put option for $1.55 and sell the April 55 put option for $0.35. His maximum risk is $1.20 and he can gain $3.80. The trade breaks even at $58.80 or 3.61 percent below current market price of the stock.