A June 26 news story in MarketWatch noted that –
“Stock-trading volume is expected to surge in Friday’s last moments of trading, as the Russell indexes go through their annual routine of adding and removing stocks. A massive amount of money is linked to the small-cap Russell 2000 RUT … the large-cap Russell 1000 RUI, … and their siblings. The index funds that track these benchmarks must buy or sell stocks as result of this summertime shakeup that’s finalized Friday. … Some estimates say $40 billion or even $50 billion worth of trades will take place around the closing bell on Friday.”
RVX, BXR, AND RUT OPTIONS
For investors who wish to monitor and manage their small-cap exposure, key tools to be explored include –
- Options on the Russell 2000 (RUT) Index; and
- Futures and options on the CBOE Russell 2000 Volatility Index (RVX), a key measure of market expectations of near-term volatility conveyed by Russell 2000® stock index option prices.
In addition, a key benchmark for small-cap index options-based performance is the CBOE Russell 2000 BuyWrite Index (BXR), an index that measures the performance of a theoretical portfolio that sells Russell 2000 Index (RUT) call options, against a portfolio of the stocks included in the Russell 2000 Index. On June 23 the BXR Index had its all-time daily closing high of 218.65.