The Russell 1000 (RUI) gained about 1.5% last week and is now up over 5% for the year while the Russell 2000 (RUT) was up 0.8% and is trailing RUI up a tad more than 3% for 2017.

RUT RUI Performance

The relative implied volatility of Russell 2000 options dropped to a historically more normal level last week after spending most of this year at the top end of the historical range.

RVX VIX

On Wednesday RUT managed to close over 1400 which bought out at least one trader with a short term bearish outlook.  With about 30 minutes left in the day there was a seller of 1200 RUT Feb 24th 1440 Calls at 1.66 and then purchased 1200 RUT Feb 24th 1450 Calls for 0.96 netting a credit of 0.70.  This 0.70 turns into a profit if RUT is under 1440 on the close this coming Friday with the trade being a disaster if RUT manages to top 1450 and stay above that level through Friday’s close. 

RUT PO 2

The link below will take you to the trade I wrote up earlier this week.

http://www.cboe.com/blogs/options-hub/2017/02/16/block-trade-analysis---large-rut-bear-call-spread