Option Trade:

Protective Put: We have previously expressed our concern about the absurd levels of some Canadian housing markets and the large exposure that Royal Bank of Canada (TSX: RY, NYSE: RY) has to these markets. This option strategy will provide some downside protection for our long position against a possible share-price decline, or simply offer an opportunity to profit from such a decline.

Buy to open an Oct. 21, 2016 put option with a strike price of C$76.00 on Royal Bank of Canada (TSX: RY, NYSE: RY) at or below the current mid-price of C$2.15 per option.

Note that this trade can also be performed on the U.S. market. The most similar option has a strike price of US$60.00.