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) -- Top Gun Options sees a big week ahead in terms of the latest round of quarterly corporate earnings, and Wall Street may be ready to place its radar firmly on home ground. Maybe, provided of course, that a new wave of angst doesn't find its way over from across the Atlantic, or Iran and Israel decide to drop the gloves once and for all. They will by the way... With a number of the equity market's heavy hitters scheduled to announce fourth-quarter earnings results, including Goldman Sachs ( GS), Google ( GOOG), Intel ( INTC), General Electric ( GE) and American Express ( AXP), investors have a chance to get a clear read on corporate America's health. With all three of the major indices slightly up on the year, the distinct possibility of an extended bullish push may be in the cards, should the fourth-quarter results meet or surpass expectations. Last week, the Dow Jones Industrial Average clawed its way up by 0.5%, an outcome that hardly seemed likely Friday morning when investors sold off strongly in reaction to the latest round of eurozone sovereign debt fears. All but a third of that dive was recovered, however, allowing the Dow to finish the week in the black.
On the Options FrontWith a number of key financial institutions issuing fourth-quarter earnings reports this week, there is the potential for a serious short-term move in the financial-services sector. Taken together with Friday being options expiration, which often ratchets up trading volatility, speculative traders have the opportunity to put on a trade that would profit nicely from any sharp market move that may follow.
Buy 1 FAS JAN12 75 Put
Total Debit: 5.44 Firing Line: It is important to note that we would exit this trade prior to market close on Friday. Profit target: 50%. Should the trade suffer a 25% loss, exiting the straddle would be prudent for us in our Model Portfolios, which are up nearly $5,000 in just two weeks of 2012 trading. Happy hunting and make sure you hedge!