The S&P 500 is rising up to its 50-week moving average; will that be the reversal point where the market again turns lower? Such an event would not be unprecedented. Maybe it's a reasonable time to think about hedging one's bets.

Another idea would be to employ a bear put vertical on SPY. This would involve buying a put at one strike and selling another put (same expiration) at a lower strike. Compared to the long put, this protection is less complete, but also less expensive.

The idea this week is less about a neat trade and more about recognizing that the market has approached a key decision point. Does it power higher or retreat? Anytime a person is unsure and has something to lose if the market falters, an options hedge might make sense... or even dollars.

Take your free trial of ChartBender Pro!