Yesterday on the Fast Money Final Call, Brian explained the advantages of using ETF’s as opposed to mutual funds. As an option trader, he loves ETF’s because instead of owning mutual funds, he can trade ETF’s for less fees. Also, with ETF’s, he gets paired options to use against ETF’s to over-write his long bias and generate income. Even though ETF’s fell during the flash crash, you can still use options to mitigate your risk. Brian suggests buying a downside put for downside protection or selling an upside call to collect a little extra premium. The example Brian used was EWZ, a Brazillian ETF. He suggests selling the Dec.76 call at $3.70 and taking in some premium there. You will break even on the upside at $79.70 and you are willing to be called away above $76.00. With this trade, you add a little extra income to your portfolio and you still have the Brazillian exposure.

Trading ETF’s