OptionsHouse

Options Trading News

December 19, 2013  Thu 9:53 AM CT

IWM: SEE CHART GET CHAIN FIND STRATEGIES
An enormous put sale is looking for a floor in the iShares Russell 2000 Fund.

optionMONSTER systems detected the sale of 30,000 March 105 puts for the bid price of $1.79. Open interest was 16,676 contracts before the trade appeared, clearly showing that this is a new position.

The put seller is taking in a credit of $5.37 million, which would be kept as profit if the IWM stays above $105 through expiration in mid-March. But the trader also carries the risk of having to buy the stock if it falls below that strike price, which means that he or she would be on the hook to purchase $315 million worth of shares. (See our Education section)

The IWM is down 0.39 percent to $112.44 this morning. The exchange-traded fund posted an all-time closing high of $113.51 three weeks ago and was last below $105 in mid-October.
Share this article with your friends


OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Education & Strategy

Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

View more education articles »