IWM has been chugging uphill like The Little Engine That Could, rising almost 17% in 2019 so far. It’s been down only 8 out of the 33 trading days this year, which might make you think that the boxcars IWM is pulling are filled with loaded dice. But watch the market long enough and you’ll see statistics defied with some regularity. IWM’s volume has been slowing down, suggesting reduced appetite for the small cap sector. And that, like the Little Engine, could mean that it’s reached the top of the mountain, at least for now. With IWM’s IV low, debit spreads are more attractive trades. If you think IWM might be headed for the downhill side, the long put vertical that’s short the 155 put and long the 158 put in the March quarterly expiration with 37 DTE is a bearish strategy that has a 64% prob of making 50% of its max profit before expiry and that generates $.23 of positive daily theta.
Opened 19/02/20 for $1.28 debit
Closed 19/03/06 for $1.93 credit