What Options Traders Are Watching In The Final Week Of 2014

Scoreboard: Friday ended a green week, but the volumes were meek.

In terms of price action, Friday did not make much sense. The markets were green on a day where bonds and the VIX were also green; usually markets should be red on strong bond days.

Now What? The fundamentals are still intact as they were for the last six months. A few points deserve to be made at these levels:

Experts are again sounding all the same: They want to buy everything in sight. This happens when the market goes a few days without a negative headline.

Investing is not this easy. It would seem that the Russian and Greek crises have been resolved. In fact, they could be far from it, but the impression is what counts at this time.

In China, meanwhile, recent headline-easing lending released an insane amount of money into the country's system. But why? What does China see that is not clear to the world? A low and unexpected growth number could cause market issues if Europe follows.

Related Link: Warren Buffett On Why America Has The 'Secret Sauce'

European Stimulus: They still need to deliver it. If there is disappointment in execution or size, markets could sell off in January. Late January puts could capitalize on this scenario, for example.

The Fed is expected to start raising rates in 2015. If so, then the adage of "don't fight the Fed" takes on the opposite meaning. The Fed is not expected to raise rates since CPI is under control, but its statement -- "data dependent" -- could indicate reactionary behavior moving forward.

Trades: Staying light with new trades until markets are done trading the "Santa rally" could make sense.

Alibaba Group Holding Ltd BABA is also worth keeping an eye on. It has been dormant for a while, but is at a technical point where it could be vulnerable.

Conversely, if shares shake the recent under-performance and if the markets continue running, Alibaba might run too.