Russell 2000 Index Weekly Income Trade

TheOptionPlayer.com sets up a Russell 2000 short-term (7-day) option strategy. Investors could simultaneously:

Sell the September 2nd expiration RUT $1260 call for $2.85 (Thursday’s closing quoted bid/ask mean)
AND
Buy the $1265 call at $2.00

The difference between funds received and paid out is a $.85 per share credit which we keep if the Russell 2000 closes below $1260 on Friday September 2nd but immediately exit the position if it appears the price will end up higher. If the price gaps higher open the trade using higher strike prices. See Guidelines page for explanation on how trade is set up.

Why we recommend it:
As confirmed in the chart below, the Russell 2000 Index continues to trade below a resistance level near its 52-week high. Price momentum remains flat as investors commiserate about FOMC comments related to interest rates. We are betting that the Russell 2000 Index won’t reach the target price prior to the option expiration date in 7 days. See the link for a recent similar trade that was profitable.

RUT DailyChart 08252016

52-Week High: $1248.15
52-Week Low: $953.72

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