Dan Nathan's SPDR S&P Homebuilders (ETF) Trade - SPDR Series Trust SPDR Homebuilders ETF (ARCA:XHB)

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On CNBC's Options Action, Dan Nathan shared a bearish options strategy with the viewers in

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SPDR S&P Homebuilders (ETF) (NYSE: XHB). He said that the whole market is focused at the moment on Fed's March 18 meeting, waiting to find out if Fed is going to raise rates. If rates go higher and mortgage rates follow quickly there could be a pause in home building activity.

SPDR S&P Homebuilders (ETF) rallied 35 percent from October lows and if it drops below its break out point it could slip to $32, explained Nathan. He wants to buy the April 35 puts for $0.80 and sell the April 32 put for $0.15, paying $0.65 for the spread. The maximal gain is $2.35 and the maximal risk is $0.65.