Since options trader Pete Stolcers, of OneOption.com, currently doesn’t trust the market, he outlines how—by selling out-of-the-money bullish spreads—he can distance himself from the action and take advantage of time decay.

Current Options Trading Strategy: I sold out of the money put credit spreads last week. This is a neutral to slightly bullish options trading strategy and I have plenty of breathing room. I don’t trust the market and I will hedge by shorting the S&P futures on an intraday basis. If the SPY trades below $204, I will short the futures and I will use that as my stop. My target is SPY $203 and that will be my new stop and re-entry if it is reached.

By selling out-of-the-money bullish put spreads, I can distance myself from the action and I can take advantage of time decay. Do not hold these positions over earnings announcements. The stocks I am selling puts on will announce in two or more weeks or they have already posted results. There is technical support between the short strike price and the stock price. If support is breached, I will buy back the put spread.

I am not buying call options. I like to have market momentum working in my favor and we don’t have it.

Posted 10:15 AM ET Monday—Last week the ECB announced that it will purchase €60 billion worth of bonds each month. This QE was largely anticipated and the market rallied on the news. The move higher had a short covering feel to it and some of the gains were given back Friday.

Over the weekend, we learned that the anti-austerity party (Syriza) won the Greek elections. They promised in their campaign to ignore fiscal constraints required by the ECB/IMF. I doubt that the rhetoric will be heated for the next two weeks, but this could be a potential problem down the road. Greek bond yields are jumping.

Conflict in the Ukraine is also escalating and rebels are bombing a port city. The US and EU are considering additional Russian economic sanctions.

The economic calendar is fairly light. Durable goods orders will be posted Tuesday and GDP will be released on Friday. I am not expecting a major reaction to either number.

On Wednesday, the FOMC will release its statement. Central banks have been easing and the dollar is screaming higher. It will be difficult for the Fed to tighten in this environment and I am expecting dovish rhetoric.

Earnings season is in full bloom and we will hear from Microsoft Monday. Apple will announce Tuesday, Facebook and Alibaba on Wednesday, and Google and Amazon on Thursday. We need excellent news this week if the market is going to move higher. I won’t be able to gauge the strength of the bid for a few days.

I sense that danger is lurking. After the ECB announcement last week, the market sold off. Eventually it rebounded, but this was not the type of strength we’ve seen after previous central bank easing. QE has not stimulated economic growth and this is nothing more than a sugar high.

Europe’s economic growth has been in the dumps for years and Japan is faltering. China is the largest economy in the world and their growth has been gradually drifting lower. Domestic conditions are strong, but US exports will decline as the dollar surges.

Earnings season is our last hope for a rally. The results should be strong and I believe the market will tread water.

We’ve seen light volume rallies and heavy volume declines the last few months. This is a bearish sign and we have breached the 100-day moving average with greater frequency. If the SPY trades below $201 in the next few weeks, we will quickly test the 200-day moving average.

I hate to sound wishy-washy, but this market lacks direction and the technicals are deteriorating.

Sell some out-of-the-money bullish put spreads and maintain stops. Hedge using SPY put options intraday or short the S&P e-Mini. In the next few days we will know if earnings are able to spark a rally.

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By Pete Stolcers of OneOption.com