Dan Deming's iShares Russell 2000 Index Options Trade

KKM Financial's Dan Deming spoke on Bloomberg Markets about an options strategy in iShares Russell 2000 Index IWM.

Deming suggested that investors should consider buying the May 150/147 put spread and selling the May 144 put for a total credit of $0.70. He explained that the breakeven for the trade is at $140.30. If the stock drops below $144 at the May expiration, he will have to buy the stock at that price, but if that happens the May 150/147 put spread is going to make a profit of $3, which will, together with the collected premium, decrease his entry price to $140.30. Deming would be happy to own iShares Russell 2000 Index at $140.30.