Trader Deploys 'Put Spread' To Brace for Russell Decline

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From The Wall Street Journal

BY BRENDAN CONWAY

NEW YORK—Protective and bearish traders predominated, with the day's biggest options trade shielding investors in case smaller stocks run into trouble.

A major investor bought a large "put spread" designed to counteract declines of 12% in the iShares Russell 2000 Index Fund by mid-November. The fund, which tracks small-capitalization stocks, has put in a strong performance in recent weeks, rising nearly 12% since Aug. 26 and outpacing the gains of larger stocks. It closed up 66 cents, or 1%, at $67.48. The move suggested worry that the small-cap measure could lose all the gains ...