Option trader Pete Stolcers, of OneOption.com, surveys last Friday’s price action and explains that he’s going to be selling some out-of-the-money April bull put spreads and recommends option traders keep their trades very small in this low probability environment.

Posted 10:00 AM ET Friday—The market is caught in the middle of the trading range and it is searching for direction. Stocks are erasing Thursday’s losses Friday morning and quadruple witching has turned out to be a non-event.

The EU and Greece agreed to financing terms on February 20. Friday they agreed to agree. The money will be delivered and the market loves the news. Get used to this crazy soap opera…it will never end.

Bull markets do not hang on the fate of one tiny nation or on one word in a FOMC statement or on a miniscule quarter-point rate hike from 0%. They are based on economic growth and corporate profits.

Global activity is fragile. Europe is barely in positive territory. Japan’s huge QE has not produced results and the economic bounce has been small. China’s growth continues to slip and their Finance Minister said that they might not hit their target of 7% growth. US economic releases have been soft and this was noted in the Fed’s statement.

Corporate profits will be hurt by minimum wage increases. Labor is the largest input cost, by far. Multi-national earnings will also be hurt by a strong dollar.

Central bank money printing has gone wild. Unfortunately, it is not stimulating economic growth. QE announcements are not pushing markets higher and this life-support is losing its punch. Money printing has pushed interest rates down to historic lows making equities attractive relative to bonds. Money has to go somewhere and that is keeping stocks afloat.

You can tell from my comments that I don’t like the macro backdrop.

Earnings season is two weeks away and that typically attracts buyers. We are within striking distance of the all-time high and I hope we challenge it. We have been trapped in this trading range for six months and we need to breakout/breakdown.

The news is very light next week. Flash PMI’s will be released on Tuesday and China is of greatest interest to me. Even if the number is weak, the market will expect the PBOC to ease.

With interest rates at zero (or negative in some cases), I believe we will finally have to go through a natural economic cycle. Central banks are out of ammo.

The market broke the one-hour low Thursday and I got short (day trade). It didn’t take long for the market to rally back into the range and I stopped out. The rest of the day was boring and I suspect most traders were watching the NCAA Tournament.

I will trade the one-hour range again Friday. If we don’t breakout of that range, I will watch some basketball. That has been much more exciting than this market.

Keep your trades very small in this low probability environment. I am selling some out-of-the-money April bull put spreads. Earnings season and a dovish Fed should keep buyers engaged.

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By Pete Stolcers of OneOption.com