Weekend Review – Russell 2000 Index and Volatility – 4/18 – 4/22

For the first time in 2016 the Russell 2000 (RUT) moved into positive territory last week. A gain of 1.4% places RUT just under 1% in the green for the year. Small caps also closed the gap with large cap stocks as the Russell 1000 (RUI) was up by 0.60% and is less than 1.5% higher than RUT for the year.

RUT RUI

Despite the run in small caps, the CBOE Russell 2000 Volatility Index remained relatively high compared to VIX last week. I take this as being an indication that there are not a ton of bulls out there. I actually spoke to an AAII chapter on Saturday morning and not a single person in the room was bullish. Read that as you may.

RVX VIX

On Friday with RUT near 1141 a trader sold the RUT Jun 17th 1220 Calls for 2.52 and purchased the RUT Jun 17th 1230 Calls for 1.74 taking in a net credit of 0.78. They appear to be assuming RUT will not climb by more than 6.5% between now and mid-June.

RUT PO