Russell 2000 Traders Place Bearish Bets Via IWM ETF

The iShares Russell 2000 ETF IWM has been trading sideways for the better part of the last six months between $211 and its all-time high of $234.53 from March 15.

IWM is comprised of the 2,000 smallest companies that make up the Russel 3000 and is generally regarded as a bellwether of the U.S. economy. IWM is the largest Russell 2000 ETF and holds $66.87 billion in assets. The top five largest equities in IWM include:

• AMC Entertainment Holdings Inc AMC with a 0.76% weighting.
• Intellia Therapeutics Inc NTLA with a 0.34% weighting.
• Arrowhead Pharmaceuticals Inc ARWR with a 0.28% weighting.
• Ovintiv Inc OVV with a 0.27% weighting.
• Crocs Inc CROX with a 0.25% weighting.

On Tuesday the general markets were flashing some warning signals a pullback might be in the cards when the SPDR S&P 500 SPY made a new all-time high of $437.84 but didn't get bullish follow through to push it higher. Similarly, the Nasdaq pulled back from its new all-time high of $14,803 in consolidation.

A number of IWM option traders believe another push down may be on the way and purchased over $2.65 million worth of bearish put contracts.

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The IWM Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 10:17 a.m., a trader executed a put sweep at the ask of 250 iShares Russell 2000 ETF options with a strike price of $197 expiring on Dec. 17. The trade represented a $132,250 bearish bet for which the trader paid $5.29 per option contract.
• At 10:25 a.m., a trader executed a put sweep near the ask of 250 iShares Russell 2000 ETF options with a strike price of $197 expiring on Dec. 17. The trade represented a $131,500 bearish bet for which the trader paid $5.26 per option contract.
• At 10:28 a.m., a trader executed a put sweep near the ask of 250 iShares Russell 2000 ETF options with a strike price of $197 expiring on Dec. 17. The trade represented a $131,750 bearish bet for which the trader paid $5.27 per option contract.
• At 10:44 a.m., a trader executed a put sweep near the ask of 500 iShares Russell 2000 ETF options with a strike price of $223 expiring on July 16. The trade represented a $101,500 bearish bet for which the trader paid $2.03 per option contract.
• At 11:47 a.m., a trader executed a put sweep near the ask of 200 iShares Russell 2000 ETF options with a strike price of $225 expiring on July 23. The trade represented a $76,800 bearish bet for which the trader paid $3.84 per option contract.
• At 11:52 a.m., a trader executed a put sweep near the ask of 1000 iShares Russell 2000 ETF options with a strike price of $195 expiring on Aug. 20. The trade represented a $84,000 bearish bet for which the trader paid 84 cents per option contract.
• At 11:52 a.m., a trader executed a put sweep near the ask of 909 iShares Russell 2000 ETF options with a strike price of $223 expiring on July 23. The trade represented a $258,156 bearish bet for which the trader paid $2.84 per option contract.
• At 12:14 p.m., a trader executed a put sweep near the ask of 886 iShares Russell 2000 ETF options with a strike price of $223 expiring on July 16. The trade represented a $139,988 bearish bet for which the trader paid $1.58 per option contract.
• At 12:14 p.m., a trader executed a put sweep above ask of 1615 iShares Russell 2000 ETF options with a strike price of $223 expiring on July 16. The trade represented a $255,170 bearish bet for which the trader paid $1.58 per option contract.
• At 12:41 p.m., a trader executed a put sweep at the ask of 440 iShares Russell 2000 ETF options with a strike price of $210 expiring on Aug. 20. The trade represented a $99,880 bearish bet for which the trader paid $2.27 per option contract.
• At 1:05 p.m., a trader executed a put sweep at the ask of 300 iShares Russell 2000 ETF options with a strike price of $225 expiring on July 23. The trade represented a $119,700 bearish bet for which the trader paid $3.99 per option contract.
• At 1:47 p.m., a trader executed a put sweep at the ask of 224 iShares Russell 2000 ETF options with a strike price of $218 expiring on Aug. 20. The trade represented a $96,544 bearish bet for which the trader paid $4.31 per option contract.
• At 2:18 p.m., a trader executed a put sweep at the ask of 500 iShares Russell 2000 ETF options with a strike price of $220 expiring on Aug. 20. The trade represented a $238,500 bearish bet for which the trader paid $4.77 per option contract.
• At 2:20 p.m., a trader executed a put sweep at the ask of 700 iShares Russell 2000 ETF options with a strike price of $210 expiring on March 18, 2022. The trade represented a $785,400 bearish bet for which the trader paid $11.22 per option contract.

IWM Price Action: iShares Russell 2000 ETF closed down 1.8% at $222.30.