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The next two trading days should be bullish, but, following that, February tends to be a bearish month over the last 20 years or so. The market has been on a bit of sugar high since Donald Trump’s election, but I believe it is starting to come back to reality. A lot of the problems that existed before the election will begin to weigh on the market more heavily.

So, while I don’t necessarily expect a major correction right away, I am opting to put on some “portfolio insurance” via a ratio put debit spread on the SPDR S&P 500 ETF Trust (NYSEARCA:SPY):

Using a spread order, buy to open 1 SPY Feb. 24th $224 put and sell to open 2 SPY Feb. 24th $217 puts for a net debit of about $0.30.

A ratio debit spread is simply a way to lower the cost of buying options, as the two option(s) that you sell to open (short) helps offset the cost of the option that you buy to open. Therefore, this ratio put debit spread is a way to lower the cost of establishing a bearish put option trade. Many brokers will require the use of margin and/or a set amount of reserved capital and/or a margin account to execute a debit spread; contact your broker directly for specific requirements.

SPY shares are currently trading at about $228. Because you are short a naked put in this ratio put debit spread, the risk is that you could be obligated to buy 100 shares of SPY at the $217 strike price for every 1 contract that you are short of the SPY Feb. 24th $217 puts. So, this is inherently a higher risk play, and you’ll want to exit if SPY gets down to $217.

For $30, this trade gives us pretty cheap downside insurance. I went slightly out-of-the-money with the long put to make sure we got a very low price. The rally has lost a lot of gas; plus, I mentioned earlier that February is a bad month, and that’s my reasoning with the Feb. 24 expiration.

Ken Trester is editor of the popular Maximum Options program. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.