Small cap stocks finished the week up about 1.8% when measured by the Russell 2000 (RUT) while large caps had a good week as well with the Russell 1000 (RUI) moving up by about 1%.  For the year RUI is still ahead of RUT, but small caps are trying to close the gap.

RUT RUI 11242017

We got quite a move higher in the relationship between the Cboe Russell 2000 Volatility Index (RVX) and VIX.  Sometimes this is attributed to a rise in RVX, but more often it is due to a drop in VIX and that was the case last week.

RVX VIX 11242017

Who says option buyers never make money?  Some people do, but I don’t.  On Monday, just a few minutes into the trading week there was a buyer of the RUT Nov 24th 1495 Calls for 7.20.  This trade went off when RUT was at 1494.  We know from the first chart in this blog that this trade worked out pretty well if held through Friday’s close.  Just to reaffirm that point here’s a payoff diagram showing where RUT was when the trade occurred and where we finished the week. 

RUT PO 11242017