Santa Rally or Not? A Clean 0DTE Setup Into Year-End

After the late-November flush and sharp V-shaped rebound, the market has clearly lost momentum. From an index perspective in particular, price action has turned noticeably directionless.

That said, with year-end approaching, the barrage of “data + headlines + policy” catalysts is also close to running its course—most notably after the Bank of Japan’s rate decision this Friday. Once that’s out of the way, the market will enter a rare roughly one-week “air pocket” with fewer major scheduled shocks. That may be exactly what reopens the door for a Santa rally that previously looked unlikely.

Here’s my (admittedly bold) base case: if the major indices can stabilize and put in a modest rebound over the next one to two sessions, the Santa rally narrative is not dead.

From a trading perspective, this sets up a clean 0DTE options opportunity.

The idea is to focus on year-end expiries and express only the next one to two weeks of upside possibility, with the upside target anchored to the prior swing high. For the S&P 500, that reference level is 6,900; for the Nasdaq, 23,700. Relative to current levels, that implies potential upside of 1.51% and 2.55%, respectively.

Options Setup

Two approaches:

1 Buy at-the-money calls expiring this week or next week (details below):

For SPY

For QQQ

2 Express a view on next week’s precise terminal level (details below):

For SPY

For QQQ

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