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.

NEW YORK (

Top Gun Options

) -- As of Monday morning, we at

Top Gun Options feel as if investors have shifted into a happy holiday sentiment, continuing to build on the uptrend that began last week.

As of last Friday, the

Dow Jones Industrial Average

(DJIA) gained over 800 points, and Wall Street successfully reversed the recent losses sustained over the second half of November. All three of the major indexes gained over 7% on the week, with both the

S&P 500

Index (SPX) and the

Nasdaq Composite Index

(COMP) joining the Dow. The SPX even managed to briefly top 1260, which is where it began the year.

Technically speaking, the SPX has wrestled with its 200-Day Moving Average all year, finding it a hard level of resistance to overcome for any length of time. The money question now is, will it manage to top the 1260 level and end the year in the black?

The answer to that question will undoubtedly be found across the Atlantic, as a series of crucial meetings will be held to effectively decide on the direction the European Union will go.

While Germany's Merkel and France's Sarkozy remain far from agreement in terms of that direction, with Merkel shunning the idea of euro bonds and Sarkozy rejecting the idea of ceding France's fiscal independence to the broader EU, there is a clear acknowledgement that a shift must be made, and fast.

While any serious changes recommended this week at the EU's final summit meeting of the year will require a reasonable period to implement, Wall Street has shown time and time again that it will react strongly and positively at even the slight hint of progress.

On the other hand, investors remain equally ready to sell if the promises of solutions don't hold up to the light of day.

As of Monday morning, however, a pre-summit meeting between the two most powerful members of the eurozone seemed to offer investors enough positive signs of some degree of resolution to the EU's sovereign debt crisis that the equity market shot up fast and strong.

The devil is, as always, in the details, however, and Wall Street will closely track the news that filters out from the summit meeting, looking to see if there is anything of substance to support the initial rosy assessment.

Checking in on the VIX

The VIX (Chicago Board Options Exchange Market Volatility Index), often referred to as the "fear-index," is dropping further down the lower range of its four-month trading period, touching below 26 as of Monday morning. Reflecting a sentiment of less uncertainty than has recently been the case, the VIX continues to offer an attractive price for those who want to hedge their bullish portfolio.

As for the Bears, who aren't buying into all the holiday cheer, and remain suspicious of the promise of a sustained "Santa Claus Rally", it may be the perfect time to say "bah humbug" and to load up the stockings with some VIX derivatives to position your portfolio for a failed summit solution.

Note: You can't trade the index directly, but the

S&P 500 VIX Short-Term Futures ETN

(VXX) - Get Report

tracks the Volatility Index fairly closely, providing a reasonably good way to trade the VIX.

On the Options Front

Last week, the Top Gun Options Team offered up a range-bound trade on USO (United States Oil Fund). The Iron Condor trade placed a bet that USO would stay above $35, while remaining below $41, for the month of December.

Firing Line:

As of Monday morning, crude oil, which is the commodity tracked by USO, was up over a dollar, placing it over $102, which puts it at crude's highest level since mid-summer. The century mark on oil is one of those "psychologically important" benchmarks commonly referred to by both technical and fundamental traders, and it won't be unusual to see crude test $100 for a new level of support. Happy hunting and make sure you hedge.

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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.