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Bearish spread in Russell 2000 ETF

Chris McKhann (chris.mckhann@optionmonster.com)

A large bearish trade topped heavy option volume in the iShares Russell 2000 Fund yesterday as it saw its worst session in nearly two months.

More than 1.68 million IWM options traded, compared to a daily average of 365,000. The activity was led by a three-way spread in the April Weekly options that expire at the end of next week.

optionMONSTER systems show that 13,500 each of the April 93 and 87 puts went for $2.41 and $0.30, while 27,000 April 90 puts traded for $0.91 at the same time. This butterfly spread is designed to profit from a limited move lower in the IWM, which tracks the small-cap Russell 2000. (See our Education section)
The position was opened when the exchange-traded fund was at $91 going into the final two hours of trade. The IWM finished the day down 3.77 percent to $90.11, its lowest close since Feb. 26. The fund was above $94 on Thursday.

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