A bit delayed on this post but on Jan 22 I bought 5 call options on IWM with a $110 strike / Sept 26, 2016 expiry, you can view all the info on my trade alerts page. The market has been pretty oversold lately and this trade is simply just a short term bet that the market will bounce from current levels. I hope the move takes place quickly over the next week or 2 so that I can get out with my profit and be on my way!
The chart below shows the technical indicators starting to turn up, and hopefully with the help of some positive news this week I’ll get the move I want.
So why IWM? Since the market’s top in 2015, the S&P500 fell -14.4% whereas IWM fell -25.5% from highest to lowest. IWM tracks the Russell 2000 small-cap index, and with the increased volatility… I’m hoping to get more of a move out of IWM than I’d get out of SPY (which tracks the S&P500).
Overall, I think the market momentum is still negative long-term. I do not believe that any rally we get from this point forward will be a sustained rally to push significantly higher than the 2015 highs… if we even get that far. Once I close this trade I will be looking at remote OOM put options on SPY to protect my portfolio in the event the markets move down even further.
Good luck in these crazy markets!!