Russell 2000 fund faces bearish bet

optionMONSTER

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.

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