Bulls score big in $IWM at highs

The iShares Russell 2000 Index Fund hit a new all-time high today, delivering substantial profits to upside option positions opened less than three weeks ago.

On May 15, Investitute’s proprietary programs showed that 10,000 $164 calls expiring on June 8 were purchased for $0.41 with shares at $158.99. These were clearly new positions, as open interest in the strike was a mere 834 contracts before the activity appeared.

Those calls traded for $1.32 today, more than 3 times their initial purchase price. The stock rose 3.5% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

IWM was up 0.53% to close at a new lifetime high of $164.71 today. The index ETF has been grinding higher since its Feb. 9 low, bucking some pundits’ calls that this is a late-stage bull market, where small-cap companies historically underperform their larger peers as borrowing costs for debt rise along with interest rates. The smaller-market-cap companies included in the Russell 2000 have recently been perceived as less sensitive to tariff and trade worries; they also benefit from deregulation.