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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.


Top Gun Options

) -- It would seem to the

Top Gun Options

trading team as if investors have factored in the current round of noise emanating from across the Atlantic. How else to explain the fact that, in spite of the news that Greece finally signed off on the latest round of bailout funds, all Wall Street could do was shrug and nudge higher by a couple of points?





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True, it was somewhat anticlimactic as the eurozone finance ministers approved over $170 billion in loans that would allow Athens to meet its latest round of debt obligations. There were few, if any, surprises in the agreement that requires Greece to comply with a new wave of austerity measures, including the promise to severely reduce its unwieldy debt-to-GDP ratio. The ratio currently sits at around 160%, and Greek leaders must somehow find a way to lower it to 120% by 2020.

With elections due to take place next month in the beleaguered Mediterranean country, the big question investors are likely to ask is this: If the country elects a new set of leaders, as is expected, will they honor the current commitments that have just been made? As evidenced by the quiet response to the latest deal, skepticism certainly remains.


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Dow Jones Industrial Average

managed to scale a psychologically important wall, at one point climbing past 13,000. It was the first time since 2008 that the level has been reached. However, without any particular reason to climb higher, the Dow got swatted back down to 12,965, though it did end up 15 points on the day.

Also ending the day on the upside was the

S&P 500 Index


. The benchmark index has managed to stay above the 1,300 level for the last several sessions, and if it continues to build a level of support at that line, it could resume the strong push higher that has carried it over 100 points higher on the year to date.

A Look At the VIX


Chicago Board Options Exchange Market Volatility Index

ended the first trading day of this holiday-shortened week at 18.19, trading in a 10% range intraday. This reflected the uncertainty that remains even after the Greek bailout deal was completed on Tuesday. Remaining close to the bottom of its seven-month trading range, the VIX continues to provide traders and investors with a cost-effective volatility hedge.

And, for anyone who may doubt it, this market remains highly susceptible to mood swings and news blasts. In spite of whatever paper any member of the eurozone happens to sign, particularly regarding debt, the market remains doubtful that any proposed fix is anything but short-lived. The most liquid of the VIX derivatives, such as

iPath S&P 500 VIX Short-Term Futures ETN

(VXX) - Get iPath Series B S&P 500 VIX Short-Term Futures ETN Report

, remain as hedging tools of choice for protecting your portfolio at a reasonable cost against a "Black Swan" type of event.

On the Options Front

The drama that continues around Iran has caused crude oil to spike above the $105 per barrel level, the highest rate it has been at in over nine months. At this point, speculators are apparently betting that the commotion around the threatened embargo will result in additional price increases on the international spot market for oil. Of course, any increase in acrimony between Iran and the European Union members will result in an additional rise in the cost of crude.

Looking at a chart for the

United States Oil Fund

(USO) - Get United States Oil Fund LP Report

, it can be seen that its 50-day moving average should provide a reasonable level of support, at least in the short term. Here's a trade one may consider that will pay off as long as USO doesn't drop below 38.44 by March expiration.

  • Sell 1 USO March 39 Put
  • Buy 1 USO March 34 Put
  • For a total credit of .55

Firing Line

: At

Top Gun Options

we'd put a 25% stop-loss on this trade (per our trading rules of engagement), as, unlikely as it may be, a round of spontaneous equanimity could break out, resulting in a dive in the cost of the black gold.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.