The charts suggest that the market's potential downside is limited, according to technical trader Todd Gordon of TradingAnalysis.com, and that has him turning the options market.
Last week, Gordon told CNBC's "Trading Nation" that a daily chart of the S&P 500 ETF (SPY) showed a gradual uptrend, tapering off into what he called a "three-way correction" move recently.
Using the correction's two recent downtrends as references, Gordon established that the SPY's support is around the $201 region, though he mentioned that anywhere from $200 to $205 could be used as support levels as well.
With the ETF closing Friday trading at $205.49, Gordon's data suggests that stocks have little room left on the downside.
On the other hand, he doesn't see a substantial rise as particularly likely. That sets up nicely for Gordon to sell a put spread – a trade also known as a "bull put spread."
According to the analyst, "I'm not convinced that the market is going to break out right now. If I were, we could do a call debit spread, which is taking an outright directional play in the market," he pointed out.
"Selling a put spread allows you to make money if the market goes up, sideways or even slightly lower with a combination of decreased volatility," he added.