Aiming For 4.2% Gain In IWM Trade – Eyes On The Russell 2000 for Nov 25 2015

Nov 25, 2015 | IWM ETF – Small Cap Stocks, Trade Alerts and Ideas

I have done a lot of trades in 2015 with the IWM ETF. This ETF follows the small cap world of the Russell 2000 index. Once the market softened over the summer months the small caps fared poorly falling to a 52 week low of $106.99 on September 29.

IWM ETF 12 Month Chart

Part of the reason for such good trades this year is the chart pattern. The year started out at $120 and today the IWM is sitting at $119.20 less than 80 cents below the start of the year. This demonstrates just how sideways the year has been.

The high this year reached $129.10 on June 24 and within days the small cap universe fell apart. By the time the Panic Sell-off in on August 24 hit, the IWM reached a lot of $108.26. While many analysts thought that would be the lowest level for the small caps, instead a second stronger sell-off occurred in September. By September 29 the IWM ETF was down to $106.99. Since then the small caps have staged a come-back rally which as them basically at break-even for the year.

IWM ETF for 2015

The movement of the small cap index demonstrates why I prefer combining options with strategies that focus on capital preservation, study chart patterns and trade according to the underlying trend. None of the IWM trades this year ended with difficulty and all were profitable thanks to the strategies continually being employed. I cannot imagine buying this ETF at the start of the year and holding it throughout the entire year to collect the dividend which since January has returned $1.68 for a gain from the start of the year of just 1.4%. That has to be among the worst ideas for investing, especially considering just buying the IWM ETF on Jan 2 at the close for $119.00 and selling a January 2016 covered call at $120 could have earned roughly $7.00. That combined with the dividend would have made for a gain of $8.68 for a return of 7.2% even if the shares were never exercised away. Even a simple trade of using covered calls was a better idea that buying in January 2015 and hoping for a large capital gain by the end of 2015.

My trades today continue to compound the returns made this year in the IWM ETF…………….the rest of this article is for FullyInformed members..

IWM ETF Weekly Trade for Nov 25 2015

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Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.