Options contracts do not work as a percentage gain or loss. It's based on the price of the share, and the number of shares you have an option for. This is becoming entirely impossible for me to explain, so I'm just going to hope you get it.
If you go all in thinking there might be a black Monday, you might lose a lot. Even if you have a chance to make 50x your investment, Losing 1X your investment will take you out of the game completely (if you went all in).
So how can you put yourself in a position to make a lot of money from a black day, but not get wiped out if you are wrong? Remember if you think it will be a black day, like say a 3% move, you are taking a longshot, because these are extremely rare.
For maximum gain, you want lots of options, which means you need them to be cheap. That can be achieved by going out of the money or very short term.
For minimum risk you want to go very long term, as a long term option is not greatly affected by an average day up or down.
It will however, at some point, be greatly affected, if the price movement is high enough.
The conclusion is, go far into the future, and to get the contracts, go far out of the money. Not so far that you have a large percentage spread in the bid ask, or no volume. I don't know what the ideal option would be. I'm thinking something like this:
Go in deep, 12 months out, 5-10 clicks out of the money, and on VXX not SPX. I think a 10% drop in SPX would be something like a doubling of VXX. I'm not saying this is the exact trade I would make, but something very similar. Maybe I will get greedy and go 6 months out?
If I go June 2017, 8 strikes out of the money, and VXX loses 1.00 (3%) I'd be out like 4%. If VXX Gains 1.00, I'd make about that much. If VXX gains say 10.00, I'd make 60%, and if it gains 20, then I'd make like 200% (triple). It's an exponential thing, which is why you make a lot still on a black day, but lose very little if you are wrong. Still, you would want to have a very good reason to believe it's possible.
The investment may end up costing a lot of money, but most of that money is not actually at risk.
I'm not saying Monday is a candidate "Black Monday" or not.
But at the moment, I'm just planning on making a routine, play the open, pending getting a signal.