Why this trade? From my perspective it seems quite futile to pick a direction for the market given the uncertainty surrounding events in Europe. With that in mind, I go into the mode of wanting to straddle the fence.
Up, Down. I don’t care. Just go one way, and when you do, move big.
To pay for this trade however, I pick a direction for January by selling the downside PUT in SPXU (ProShares Ultrashort S&P 500). What this means is that I see some downside in the not too distant future so I expect SPXU to rise in price.
In the meantime, I want to play for a big move this week or early next week (the December contracts expire on 12/17).