Dan Deming's iShares Russell 2000 Index Options Trade

KKM Financial's Dan Deming spoke on Bloomberg Markets about an options strategy in iShares Russell 2000 Index (NYSE: IWM).

Deming suggested that investors should consider buying the May 150/147 put spread and selling the May 144 put for a total credit of $0.70. He explained that the breakeven for the trade is at $140.30. If the stock drops below $144 at the May expiration, he will have to buy the stock at that price, but if that happens the May 150/147 put spread is going to make a profit of $3, which will, together with the collected premium, decrease his entry price to $140.30. Deming would be happy to own iShares Russell 2000 Index at $140.30.