OptionsHouse

Options Trading News

June 6, 2013  Thu 4:14 AM CT

IWM: SEE CHART GET CHAIN FIND STRATEGIES
A big put spread topped yesterday's option activity in the iShares Russell 2000 Fund.

optionMONSTER systems show that a trader bought 19,000 each of the June Quarterly 94 and 82 puts for $1.15 and $0.06 respectively. At the same time he or she sold 38,000 of the 88 puts for their bid price of $0.25.

This butterfly spread cost $0.71 to open, which is the maximum loss on the trade and would be realized if it is held until expiration and shares are either above $94 or below $82. The theoretical maximum gain of $5.29 would be realized with the fund at $88. (See our Education section)

The IWM fell 1.28 percent to $96.43, its lowest close since May 9. The exchange-traded fund, which tracks the small-cap index, was above $100 last week. It has not traded at $88 since mid-January and below $82 since early December.

Total option volume in the IWM was 811,000 contracts yesterday, with puts outpacing calls by more than 2 to 1.
Share this article with your friends


OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Upcoming Webinar:

How to Defend Your Portfolio and Profit in a Market Selloff

http://bit.ly/1OSMWU6

Jon Najarian and Sandy Chaikin of Chaikin Analytics demonstrate how to play defense when the market is selling off. And, how to turn misery into money, whether investing in stocks or trading options.

Education & Strategy

The sweet spot

When using the Stock Replacement Strategy, we must remember that in reality, we are doing a STOCK trade. We are just using options. We are replacing the stock position with an option position (long calls).

View more education articles »