The Russell 2000 Has Underwhelmed This Year, But Here's One Way To Play A Comeback

Jim Swanson , Benzinga Staff Writer

December 03, 2015 2:33pm Comments

The Russell 2000 Has Underwhelmed This Year, But Here's One Way To Play A Comeback

The Russell 2000 Index tracks the performance of 2000 small-cap U.S. equities.

The index has only surged about 0.8 percent over the past year, underperforming the Nasdaq composite, which rose more than 6.3 percent.

But, for those looking for a comeback, the ICE® Mini Russell 2000 Index® Futures binaries could make sense.

Since the Russell 2000 hit a bottom on late-September, it has recuperated almost 9 percent. However, the index is still down more than 1.3 percent year-to-date. These moves buoy a few questions, such as: Where is the index going next? Will it continue to surge? Or, will it fall once again?

For those looking to capitalize from a surge or decline or this index, binary options could prove interesting.

What Are Binary Options?

Investing via binary options is just that: Playing a binary event. “Binary options are limited risk contracts based on a simple yes/no market proposition like will the markets go up by the end of the trading week,” binary options trading site Nadex explained.

Trading The Russell 2000

There is a way to capitalize from the moves of the Russell 2000 Index (or its futures) without actually investing in the index itself. By purchasing binary options, investors can try something as simple as “will the index trade above 1,200 points this week?”

For investors thinking the answer is yes, buying this binary option could make sense. For those thinking the index will not surpass 1,200 points, selling this binary option is a reasonable strategy.