The Big Level to Watch on the IWM

The $120 area on the iShares Russell 2000 ETF (NYSEARCA:IWM) has gained significance in recent weeks

by Karee Venema

Published on Jul 28, 2015 at 1:45 PM
Updated on Jun 24, 2020 at 10:16 AM

Put players have made their presence known in the iShares Russell 2000 ETF (NYSEARCA:IWM) options pits. Specifically, the exchange-traded fund's (ETF) gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 3.79 indicates near-the-money put open interest nearly quadruples call open interest among options expiring in three months or less.

Drilling down on the front-month series, specifically, this metric widens to 4.11 -- and it appears a healthy portion of traders have targeted the 120 strike. This out-of-the-money strike currently houses peak put open interest of 188,501 contracts in the August series, which expires at the close on Friday, Aug. 21.

Such a lofty accumulation of put open interest makes the 120 level a big one to watch for the IWM. Specifically, an unwinding of the hedges related to these bets as expiration nears could create a level of support for the ETF. What's more, $120 roughly coincides with the IWM's year-to-date breakeven level, as well as double the October 2011 low -- which could reinforce the area as a short-term foothold.

In today's trading, the iShares Russell 2000 ETF (NYSEARCA:IWM) hit an intraday low of $119.34, but was last seen up 0.9% at $121.61. The $121 area -- which resisted a number of the ETF's advances in 2014 -- has helped contain the shares during a recent pullback from their June 24 all-time high of $129.10.

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