The iShares Russell 2000 Fund is down even as though the S&P 500 has rebounded into positive territory for the day, and one trader sees the small-cap index heading lower.
The IWM is down 0.33 percent to $79.07 in early afternoon trading. The exchange-traded fund climbed near $82 last week, which was a bit shy of its 52-week high above $84 from the end of March. Shares were down at a 2012 low under $73 at the start of June.
A trader bought 12,650 October 78 puts for $3.80 and sold the same number of October 70 puts for $1.54, according to optionMONSTER's Depth Charge system. The volume at each strike was well above open interest at the start of the day, so this is a new put vertical spread .
The trader spent $2.26 to open the position, which is the amoutn that will be lost if the spread is held until expiration and the IWM is above $78. The maximum potential gain of $5.74 would come if the IWM is back below $70, a level not seen since last November. (See our Education section)
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