Kevin Kelly's Utilities ETF Hedge

Speaking on Bloomberg Markets, Kevin Kelly of Recon Capital Partners suggested that investors with a long position in Utilities SPDR (ETF) XLU should consider an options strategy that offers protection ahead of the FOMC meeting.

Kelly explained that the implied volatility in the name is 12 percent and it was 18 percent the last time Fed raised interest rates. He thinks that options are cheap and he wants to buy the July 53 put for $0.72. The trade breaks even at $52.28 or 2.68 percent below the current stock price.