A bearish healthcare stocks bet using options as lagging sector hit by RFK scrutiny concerns

President-elect Donald Trump selected Robert F. Kennedy Jr. to lead the Health and Human Services Department, the United States’ top health agency. This cabinet appointment has created jitters among various healthcare stocks. I want to find a way to hedge my healthcare exposure and also capitalize on further potential downside in the lagging healthcare sector by using options in Health Care Select Sector SPDR ETF (XLV) . XLV SPY YTD mountain Health Care Select SPDR vs SPDR S & P 500 Trust, YTD Despite the mixed year-to-date performance of the top 3 holdings in XLV (which make up nearly 30% of XLV), Eli Lily, UnitedHealthcare, and Johnson & Johnson are names I still like and own. However, I do want to hedge this exposure as uncertainty surrounding policy “shaping” persists. Investors will want better understanding on what companies are potentially in RFK’s crosshairs. The trade I want to buy a put spread to express my short-term bearish view on healthcare. In this trade I bought the higher priced (more expensive) put and sold a lower price (less expensive) strike to help offset the overall expense of this debit spread. Bought XLV $143 12/20/24 put option for $2.00 Sold XLV $136 12/20/24 put option for $0.50 This spread will cost an investor $1.50 per one lot or $150 XLV was trading roughly $143 when this spread was bought DISCLOSURES: (Long LLY, UNH, JNJ , long this put spread in XLV.) 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.