On Tuesday the Russell 2000 hit a new intraday all-time high, and investors are betting the run is just getting started.
The IWM, which tracks the Russell 2000, is up nearly nine percent this year. It closed at $164.71 on Monday, so it will need to rise another 2% to hit that key $168 level.
These particular calls expire on August 17, which means that as long as the ETF trades above $168 by then, the traders can exercise their right to buy the ETF at a lower price and collect a profit (minus the cost to purchase the option).
Small-cap stocks have rallied this year, outperforming the broader market -- the Russell 2000 is up more than 7% in the past three months, compared to the S&P's 1% gain in the same time period.
Since small cap companies are domestically focused, they aren't necessarily as impacted by factors like a strong US dollar or geopolitical tensions.
Traders are also betting on Michaels Companies. On Tuesday investors bought more than three thousand calls at the June 20 strike price. The retailer, which has fallen more than 20% this year, closed at $19.02 on Monday.
Jon Najarian owns IWM and MIK calls.