Options Insight: How to Play the Russell 2000 Index

The video discusses the strength of small caps, particularly the Russell 2000, due to domestic earnings and interest rate dynamics. It explores the impact of U.S. policies and rising interest rates on financials, raising concerns about high valuations. The speaker suggests investment strategies involving call spreads in the Russell 2000 to capitalize on these trends.

What is one reason the Russell 2000 index is performing well?

• It has a high exposure to the U.S. dollar.

• It focuses on technology companies.

• It benefits from U.S. domestic policies and rising interest rates.

• It is heavily invested in international markets.

What concern is raised about the Russell 2000's current performance?

• It is not affected by interest rates.

• It is becoming too expensive compared to larger caps.

• It is heavily reliant on international earnings.

• It is not performing as well as larger caps.

What is a suggested strategy for dealing with the Russell 2000's performance?

• Investing in international markets.

• Selling puts in the NASDAQ and S&P to finance long calls in the Russell 2000.

• Avoiding financials altogether.

• Focusing on technology stocks.

What type of investment strategy is discussed in the final section?

• Short selling the Russell 2000.

• Buying stocks directly.

• Owning January call spreads in the Russell 2000.

• Investing in bonds.

What is the potential payout for the call spread strategy mentioned?

• Less than one to one.

• More than three to one.

• More than two to one.

• Exactly one to one.