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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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC’s “Fast Money” and co-founder of OptionMonster.com.