Seeing a distinct V shaped pattern in the S&P with many gaps. Also, looks as if we started a new wave count. However, could break down if corrective wave does not mature into an impulse Big 3.
Here I give a few conditions or options so to speak, to trigger a Call play or Put play with a longer trending Call play. Out-of-the-money Options .01 to .04 per contract, 900 to 280 contract options (100 shares per contract); .05 to .12, 250 to 100 contract options .12 to .25 100 to 50 contract options.
Some rules: Do not hold contracts when nearing in-the-money. Rollover Calls and or Puts if pattern breaks or breaks down. If buying or selling options after mid-day trade on expiration day, execute trades within .50 of price target and bump up/down .50 if S&P is on a run or breaks given the adequate time (more than 40 mins. unless rare case extreme high implied volatility- i.e. 08-09 crash/flash crash/US downgrade).
Gaps - http://thepatternsite.com/GaugingGaps.html#NOB3
Island Long - http://thepatternsite.com/longisland.html
V Pattern - http://thepatternsite.com/vtopbot.html
If this truly is a Wave 2 correction, we would see ; zig zag, triangle or flat, retrace from the resistance-gap window. If we are lucky enough to have a double zig-zag we will have multiple chances to use both calls/puts between resistance and support until expiration.
Corrective Phase - http://thepatternsite.com/EWCorrective.html
Triangle - http://thepatternsite.com/EWleadingTriangle.html
Double Zig-Zag - http://thepatternsite.com/EWDoubleZigzag.html
Flat - http://thepatternsite.com/EWFlat.html
If you want to HEDGE (collect money while you wait for nothing to happen, which may be the case) YOUR BET, you can sell Dec. 7th 143 Puts 50/50 or sell 138.50 Calls 50/50. If nothing happens sit back and collect the premium.
If all else stop trading to rest and rethink strategy.
Merry Christmas Rally
I would also like to give credit to B M https://www.tradingview.com/u/BM/ for pointing out the impulse EW count.