He that sitteth in the heavens shall laugh: the Lord shall have them in derision.
 Then shall he speak unto them in his wrath, and vex them in his sore displeasure.
 Yet have I set my king upon my holy hill of Zion.
2:3-5 have them in derision: The Psalmist tells us that God laughs scornfully at an attack on His Son (37:13). Ultimately, God's will, will be achieved on His timetable and with His plans. He that sitteth in the heavens: God is King of the entire universe (Psalm 93) and no authority compares to Him.
2:6 My King: David and his ancestory were given a promise by Almighty God that they would rule the Israelites under the Lord's blessing. Zion is another name for Jerusalem. My holy hill: Jerusalem was separate unto the Lord. It was the place where Abraham bound his son Isaac (Genesis 22), where the holy temple was built (2 Chronicles 3), and where Jesus would die on the cross (Matthew 27).