Bears collect fast profits in $IWM

The iShares Russell 2000 Index Fund (IWM) is trading lower today, delivering substantial profits to downside option positions opened only Friday afternoon.

On Sep. 17, Market Rebellion’s Unusual Activity Service found that 60,000 Weekly $218 puts, expiring on Sep. 24, were bought for $1.83 to $2.09 as part of a bearish spread above the existing open interest of 14,271 contracts with shares at $221.59.

Those puts traded for as much as $5.50 earlier this session, at least 2.5 times their purchase prices. The stock fell by 3.15% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

IWM was last lower by 3.51% at $214.68. The index ETF tracks the Russell 2000 which fell today, trading below its 200-Day Simple Moving Average.