Just because a semblance of market tranquility has returned after February's early correction, it doesn't mean the waters will be smooth sailing into 2019. 

Subsequently, investment bank UBS has sought to protect its clients in these choppier waters by purchasing a 10% out-of-the-money put option on the S&P 500. If the S&P 500 takes another dive, the position should become profitable. The bank says it may add to the position in coming months in order to diversify its strike prices. 

"Should our base case of modestly higher inflation, measured Fed interest rate rises (one per quarter), and rising equity markets materialize, this position most likely will not be profitable," says UBS chief investment officer Mark Haefele. "Yet we think it is prudent to potentially sacrifice some of our expected returns in order to boost portfolio stability if fears of higher interest rates continue to impact markets."

Haefele says he has made no changes to UBS' existing equity positions. 

"We have chosen to implement the position on the S&P 500, not because we have a particularly negative view on the U.S. market, but because the S&P 500 option market is the world's most liquid, and the index is a close proxy for global equities (U.S. equities represent 52% of global equities)," Haefele adds.

Somehow we think other investors aren't following UBS' lead here, which is sad given the wake-up call markets received earlier this month.

The Dow Jones Industrial Average was higher most of the week, aside from a significant dip on Wednesday afternoon following the release of the Federal Reserve minutes. By Friday, stocks rallied into the close. The Dow closed higher Friday by 347 points, or 1.4%. The S&P 500 rallied 1.6% and the Nasdaq snapped a four-day losing streak to gain 1.77% for the day.

For the week, the Dow rose 0.36%, the S&P 500 gained 0.55% and the Nasdaq jumped 1.35%. Still, the Dow, S&P 500 and Nasdaq are on pace for their worst month since January 2016.

Markets were led this week by high-flying tech stocks such as Facebook (FB) , Apple (AAPL) , Amazon (AMZN) , Netflix (NFLX) and Alphabet (GOOGL) -- all five stocks handily out-performed the Dow Jones Industrial Average. Investors also returned to 2017's strong-performing Dow names such as Caterpillar (CAT) and McDonald's (MCD) , which each rose by 3.8% on the week. 

Facebook, Apple, Amazon and Alphabet are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.

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