Large cap dominance continues as the Russell 1000 (RUI) gained 0.77% last week and the Russell 2000 (RUT) was down 0.38%. For the year RUI is now outpacing by over 3%.
Small cap risk remains high relative to large cap risk as the CBOE Russell 2000 (RVX) premium to VIX remains are elevated levels.
First thing Friday, with RUT under a bit of pressure down about 10 points around 1383 one trader came in with a bull put spread that has a ton of room for error. They sold the RUT Apr 1220 Puts for 5.23 and purchased the RUT Apr 1210 Puts for 4.77 and a credit of 0.46.
Note the maximum profit for this trade is minimal relative to the worst-case scenario of a loss of 9.54. However, the Russell 2000 has to lose over 12.5% from where it was trading when this spread was executed and as long as RUT is not down more than 11.8% the trade will return the credit received.