Dan Deming's Russell 2000 ETF Trade

Dan Deming of KKM Financial spoke on Bloomberg Markets about an options trading strategy in iShares Russell 2000 Index (ETF) IWM.

The small-cap stocks have under performed the rest of the market on Wednesday and Deming thinks they could trade even lower.

He wants to sell the August 142 call and buy the August 135/130 put spread for a total cost of $0.27. The trade breaks even at $134.73 or 0.12 percent below the current market price. It can make a maximal profit of $4.73, if the stock drops to $130 or lower. If iShares Russell 2000 Index (ETF) closes between $135 and $142 at the August expiration, Deming is going to lose $0.27. If it closes above $142, he is going to lose additional money.