Option Investor
New Plays

New Option Plays

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Call Options Plays
Put Options Plays
Strangle Options Plays
None IWM IWM

New Calls

None today.
 

New Puts

iShares Rus.2000 - IWM - cls: 66.16 chg: -1.11 stop: 68.60

Company Description:
The iShares Russell 2000 Index (IWM) is an exchange traded fund (ETF) that mimics the performance of the Russell 2000 small cap index.

Why We Like It:
I suspect that the IWM is going to breakdown from its current five-day consolidation pattern. Today's bearish engulfing candlestick could be the signal that launches the next leg lower. This is a higher-risk play since the market is so oversold and due for a bounce. On the other hand what we're doing is essentially playing the trend. We're suggesting put positions now although you could wait for a new low under $65.60 or $65.00 if you want to see a little more momentum first. Our target is the $61.00 mark.

FYI: If you prefer a more neutral strategy see the IWM strangle we just listed.

Suggested Options:
We are suggesting the August or September puts. It is up to the individual trader to decide which month and which strike price best suits your trading style and risk.

BUY PUT AUG 65.00 DIW-TM open interest=153,077 current ask $2.06
BUY PUT AUG 61.00 DIW-TI open interest= 46,549 current ask $0.93

BUY PUT SEP 65.00 IQQ-UM open interest= 42004 current ask $3.30
BUY PUT SEP 61.00 IQX-UI open interest= 1232 current ask $1.97

Picked on July 14 at $ 66.16
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 90 million
 

New Strangles

iShares Rus.2000 - IWM - cls: 66.16 chg: -1.11 stop: n/a

Company Description:
The iShares Russell 2000 Index (IWM) is an exchange traded fund (ETF) that mimics the performance of the Russell 2000 small cap index.

Why We Like It:
If you don't feel like picking a direction on the market then consider another strangle, this time on the small cap index ETF. The IWM has been consolidating sideways for the last five days and it's forming a pennant pattern. Normally these are neutral patterns and the stock could go either way. However, I suspect the move will be lower, which is why we listed the put play above. Not everyone is going to feel comfortable with a directional trade in this market so we're listing this strangle instead. This way we don't care what direction the Russell 2000 moves.

Suggested Options:
A strangle involves buying both an out-of-the-money call and an out-of-the-money put. We don't care what direction the stock goes as long as it moves one direction. If the stock moves far enough one side of our trade will rise in value and pay for the entire trade and make a profit.

We are suggesting the August options below. Our estimated cost is $1.84. We want to sell if either option hits $2.75. More aggressive traders may want to aim for more.

BUY CALL AUG 70.00 DIW-HR open interest=135255 current ask $0.91
-and-
BUY PUT AUG 61.00 DIW-TI open interest= 46549 current ask $0.93

Picked on July 14 at $ 66.16
Change since picked: + 0.00
Earnings Date 00/00/00
Average Daily Volume = 90 million
 

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