Traders Are Starting To Bet Against Small Caps

December 21, 2016 12:10pm NYSE:IWM

smallcap

Analyst Paul Weisbruch brings investors his daily fund flows update, which today points out some bearish bets rolling in against a well-known small cap index, along with an oil fund seeing bearish activity as well.


Yesterday we saw some closing activity in IWM (iShares Russell 2000) January downside puts, specifically with the 125 strikes trading in closing sales.

Since IWM is now trading with a $137 handle thanks to the stunning climb in Small Caps since the Trump election, portfolio managers may be spurning out-of-the-money hedges in the ETF, and perhaps looking to higher strike puts that may make more sense for portfolio protection at current levels in the ETF (such as the 135 down to the 130 strikes in IWM).

Since Trump’s election, IWM has reeled in over $6.3 billion in new assets, underscoring some impressive demand there. The IWM fell $0.63 (-0.46%) to $137.33 in Wednesday early afternoon trading.

In other activity, OIH (Van Eck Vectors Oil Services) April 33 puts have been somewhat active this week (over 21k contracts), and these options have plenty of time left until expiration. They’re also reasonably close to the money, given the volatility that we are accustomed to in this particular ETF thanks to gyrating Crude Oil prices.

OIH was up $0.17 (+0.50%) to $33.88 per share around the noon hour on Wednesday.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.


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