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Mike Khouw Sees Unusual Options Activity In IWN

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On CNBC's "Options Action," Mike Khouw said he saw more than double the average daily options volume in iShares Russell 2000 Value Index (NYSE: IWN) on Tuesday. The volume was a result of a single trade.

Somebody sold 2,500 contracts of the June $110 calls and bought 2,500 contracts of the June $100 puts for a total cost of 30 cents. The trade is going to lose money if the stock stays above $100 at the June expiration and the loss could be bigger than the premium paid if it trades above $110.

It can make money if IWN drops below $99.70 at the June expiration. Khouw explained that the trader is probably hedging from a potential decline of more than 6% by a week from Friday.

 

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Posted-In: CNBC Mike Khouw Options ActionOptions Markets Media ETFs