Market uncertainty has massively increased as trade tariffs remain center stage for global investors. With the CBOE Volatility Index surging higher, I want to lean optimistically and use options to potentially profit on the trade tariff temperature coming down. Using a defined risk options spread SPDR S & P 500 ETF Trust (SPY) will allow an investor to profit in a snapback recovery after this historic sell-off. .VIX 5Y mountain CBOE Vix Index, 5 years Typically, an investor can use an entire toolbox of tools to measure risk and attempt to forecast outcomes contingent upon the volatility regime at hand. However, this time, it is different. The short-term outcome of our highly volatile stock market now rests on a proverbial “arm-wrestling” match between the two largest economies in the world. SPY YTD mountain S & P 500 SPDR Trust (SPY) The longer the VIX remains tethered to 50, the more options premiums will cost. This cuts both ways and with the seismic nature of these S & P 500 intraday moves, the more considerate an investor must be of potential exposure. That being said, owning an upside call option coupled with selling a defined risk downside put spread (to help reduce costs) has the ability to profit if the market madness can subside. It’s a big “if”, I know. The Trade Bought the $540 4/25/2025 Call for $9.50 Sold the $500 4/25/2025 Put for $11.00 Bought the $475 4/25/2025 Put for $6.75 This spread will cost an investor $5.25 per one lot, or $525. An investor risks another $25 or $2500 on this spread and has the ability to have unlimited upside above $545.25. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited! DISCLOSURES: (Owns this spread) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
