Are You Long Amazon, Apple And Facebook? Here's How To Hedge Yourself

Speaking on CNBC's Options Action, Dan Nathan suggested investors with a long position in Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN) and Facebook Inc (NASDAQ:FB) should consider a hedging strategy in PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ).

Nathan explained that options prices are currently low and PowerShares QQQ Trust, Series 1 (ETF) is trading close to its resistance.

He wants to buy the July 132/120 put spread for $2.50. The trade breaks even at $129.50 or 2.12 percent below the current market price and it can maximally make a profit of $9.50, in case the stock drops to $120 or lower.