The Safest Way to Bet on the Santa Claus Rally

Group 1 - The Santa Claus rally is a phenomenon occurring during the last five trading days of December and the first two trading days of January, where stocks have historically performed well due to factors like holiday optimism and cash flow from bonuses [1][2] - Historically, the average return during the Santa Claus rally is between 1% and 2%, occurring approximately 80% of the time; however, in the 2023-2024 and 2024-2025 periods, the returns were -1.03% and -1.56% respectively, indicating variability in outcomes [2][3] Group 2 - Bull put spreads, a strategy involving two put option contracts with different strike prices, are utilized during neutral or moderately bullish market conditions, aiming for the underlying asset to trade above the short strike price at expiration [4][5] - Selling bull puts during the Santa Claus rally is advantageous as it allows investors to capitalize on expected moderate price increases while maintaining defined risk; the strategy can still yield profits even if the stock price declines, provided it does not fall below the strike price [6]