Small cap stocks rebounded with the Russell 2000 (RUT) gaining 1.4% last week which places RUT at up 1% for 2017.  Large caps, as represented by the Russell 1000 (RUI) were up just over 1% for the week which places RUI at up 2.59% for 2017.  

RUT RUI Performance

The CBOE Russell 2000 Volatility Index (RVX) is hovering around very low levels.  However, when compared to VIX, things look a little different as the relative premium continues to loom around the highest levels seen in some time. 

RVX VIX

Friday, with the Russell 2000 around 1373 a trader came in with a bearish bet on the direction of small cap stocks looking out to March standard expiration.  The purchased the RUT Mar 1350 Puts for 22.50 and sold the RUT Mar 1275 Puts for 7.50 resulting in a net cost of 15.00 and a payoff that looks like the diagram below.

RUT PO