Options News
$IWM bears maul small caps
Option traders posted sixfold gains on downside positions in the small-cap iShares Russell 2000 Fund today. On Jan. 25, Investitute’s market scanners identified the purchase of 15,000 February $157 puts for $1.46. The trade was part of a bearish spread opened with shares at $158.91. Those puts traded for $9.28 today, more than 6 times […]
Option traders posted sixfold gains on downside positions in the small-cap iShares Russell 2000 Fund today.
On Jan. 25, Investitute’s market scanners identified the purchase of 15,000 February $157 puts for $1.46. The trade was part of a bearish spread opened with shares at $158.91.
Those puts traded for $9.28 today, more than 6 times their purchase price. The stock fell 2.88% in the same time frame, showing how quickly options can far outperform moves in their underlying shares.
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 dropped 3.84% to $147.93 today. The exchange-traded fund tracks the Russell 2000 Index. Its top holdings are Nektar Therapeutics, Bluebird Bio, and Sage Therapeutics.