Despite a rough patch for about 45 minutes on Friday broad based indexes had a good week. Large caps were up 1.53% for the week when being measured by the Russell 1000 (RUI) while the small cap benchmark Russell 2000 (RUT) was higher by 1.24%.
In the volatility space the relationship between the Cboe Russell 2000 Volatility Index (RVX) and VIX remained at pretty elevated levels, despite the rise in VIX last week.
On Friday we got a dip in broad based indexes as news came out of Washington. About mid-day RUT was down as much as 2.5% on the day, but as we know buying the dips continues to work and by the end of the day RUT was down only 0.4%. As RUT started to rebound, one trader came in and sold a put spread that I know for a fact has been closed out. Specifically, when RUT was at 1510 there was a seller of 196 RUT Dec 1st 1500 Puts for 2.51 who then also purchased 196 RUT Dec 1st 1480 Puts for 0.51 taking in a credit of 2.00. The payout as of the close yesterday appears below.
I know they are done with the trade because the options have expired and the result was a profit equal to the credit of 2.00 (if held through the close Friday). This trade shows how Weeklys give us all kinds of flexibility for short term option trading. Also, I liked this particular example because they sold the strike just below the low of the day. Back in my trading days I would have managed this one by using the low of the day as a stop where I might manage or exit the trade, if that was the case here that stop never came close to being hit.