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

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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?

    Related Link: F.A.N.G. Trade Dominated 2015, But What If You're Looking To Play Non-Financials In 2016?

    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.

    A Look At The Components

    To know which stocks are in play, check out a full list of the Russell 2000’s components here.

    Some high-growth stocks included in this index are:

    • ALLETE Inc (NYSE: ALE)
    • Alaska Air Group, Inc. (NYSE: ALK)
    • A. O. Smith Corp (NYSE: AOS)
    • Balchem Corporation (NASDAQ: BCPC)
    • Cal-Maine Foods Inc (NASDAQ: CALM)
    • Cracker Barrel Old Country Store, Inc. (NASDAQ: CBRL)
    • Columbia Banking System Inc (NASDAQ: COLB)
    • Convergys Corp (NYSE: CVG)
    • Eversource Energy (NYSE: ES)
    • Heritage Financial Corp (NASDAQ: HFWA)
    • Home Bancshares Inc (NASDAQ: HOMB)
    • Monro Muffler Brake Inc (NASDAQ: MNRO)
    • Middlesex Water Company (NASDAQ: MSEX)
    • Bank Of The Ozarks Inc (NASDAQ: OZRK)
    • Preferred Bank (NASDAQ: PFBC)
    • Douglas Dynamics Inc (NYSE: PLOW)
    • Selective Insurance Group (NASDAQ: SIGI)
    • TriCo Bancshares (NASDAQ: TCBK)
    • Union Bankshares Corp (NASDAQ: UBSH)
    • Universal Insurance Holdings, Inc. (NYSE: UVE)
    • York Water Co (NASDAQ: YORW)

    Image Credit: Public Domain

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