sell calls or buy puts to protect at current price for HP
Kilburg notes that the VIX has a long term average of 20 and very rarely falls out of the teens. That's both a warning sign and an opportunity. The VIX isn't a "fear index" as it's so often labelled. It's the price of insurance. A high VIX means traders are expecting an increase in volatility. Below the 13 the VIX is suggesting that traders are buying into the idea that the recent straight move higher is the new normal.
Kilburg sees a 5% move lower coming but not yet. For some that suggests selling some stocks outright. Kilburg instead suggests investors start selling calls, allowing them to stay long stocks unless or until they move high enough to have the stock "called away." If the stock moves lower the trader keeps the premium from his sale. If it moves above the strike price the call seller simply hands over the stock at a higher price.
Bottom line: He's bullish but thinks 2013 is going to be a bumpy ride. If he's right times like this are exactly when you should start thinking of getting some protection.