Even as the Russell 2000 index led the major indexes lower yesterday, upside options were active in its exchange-traded fund.
OptionMonster’s tracking systems detected a strong buying pattern in contracts on the small-cap iShares Russell 2000 Index Fundexchange-traded fund . The fund’s weekly 82 calls, which expire this afternoon, were particularly busy with more than 52,000 changing hands. The weekly 81 and 83 calls traded heavily, as well.
Calls lock in the price that investors must pay to buy shares, so they can be highly leveraged to a rally. The short-term options bought yesterday have only today’s session to pop, however, or they will expire worthless.
The iShares Russell 2000 ETF fell 1.41 percent to close at $80.62 after trading as low as $80.17 in the afternoon. The broader market sold off yesterday as traders anticipated a bearish employment report later this morning, following an ADP labor report on Wednesday that was much worse than expected.
More than 640,000 iShares Russell 2000 ETF contracts traded in total in the session, almost twice the average amount.
—Najarian has no positions in IWM.
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