I put out a trade yesterday morning that is off to a good start. The Dow is enjoying a triple-digit gain on the heels of a historic FOMC meeting. More importantly, the Nasdaq is outperforming the Dow as it is up over 2%, or 35 points, to 1,543. The PowerShares QQQ Trust (QQQQ, $29.85, up $0.69) look poised to break $30 if we can continue the rally and get an even stronger close.

We took a look at some December options that I said could easily experience 20%-25% swings during the trading day this week and here we are. I wanted to provide some insight to the trade and why I decided to go long. The December 29 calls (QAVLC, $1.15, up $0.22) were going for 80 cents and I was pretty bullish on the market’s direction this week. I had did my homework over the weekend and looked at the past trading patterns of “triple witching” week. I had also factored in the barrage of news that would be hitting the market and how sentiment could be turning. I normally play options on stocks but I figured there was a chance to make a quick return by playing the market straight-up.

Things got even better when as we got a break when the market opened lower on Monday morning and we were able to get into this position at 80-85 cents. My initial target was $1.20 as an exit. Well, we’re right there heading into the Fed meeting. If you close the trade right now you walk away with a 50% return in less than 24 hours. If you hold out and the market takes a dive on the Fed news, you will quickly see a loss. However, if the market continues its rally, you could make even bigger gains. You could also close half out and let the rest ride.

Welcome to the life of an option trader…

Rick Rouse