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IWM Sees 2,500-Contract Call Spread Surge with 17.4% Early Gain—What’s Behind the Move?
High-Volume IWM Call Spread Trade Gains 17.4% as IWM Moves Higher
On November 18, a major options player executed a 2,500-contract call spread in iShares Russell 2000 ETF (IWM), quickly turning an average gain of 17.4%. This move caught attention for both its size and its timing—with the spread’s value jumping from a $1.35 trade price to $1.59 just within the first hour, as IWM shares ticked up by $1.42.
Key Trade Details—Structured Bullish Bet Aiming for $456K Profit
| Option Trade | Details |
|---|---|
| Expiration | 28-Nov-25 |
| Call Spread Strikes | 237 - 242 |
| Number of Contracts | 2,500 |
| Days to Expiry | 10 |
| VWAP Trade Price | 1.35 |
| VWAP Bid/Ask | 1.32 / 1.37 |
| Underlying at Trade | $231.74 |
Trade result: Buyers paid just over $169,000 (2,500 x $1.35 x 100) for the call spread, with a shot at about $456,000 in profit if IWM ends above $242 at expiration—representing the maximum gain for the spread. Within an hour, the mark-to-market value of the trade had risen by $0.24 per contract (a 17.4% gain) as the ETF advanced to $233.16. See more trade details here.
Option Skew and Implied Volatility Are Bullish
Looking at market sentiment through the options lens, IWM’s 30-day implied volatility skew currently sits at the 96th percentile versus its 52-week history—indicating that, relative to the past year, the market is signaling an unusually bullish outlook. This proprietary skew ranking means option pricing is placing higher odds on upward movement, especially for near-term calls like those in this spread.
Technical Analysis Points to Bearish Momentum Despite Short-Term Bounce
Despite the quick gain in the call spread, IWM’s broader technical backdrop looks less upbeat:
- Fast Bearish Crossover: The 20-day moving average ($243.78) is slightly above the 50-day ($243.16), but both have slipped below the current price of $233.16—a signal of recent weakness.
- Short-Term Price Lag: IWM is trading 4.4% below its 20-day average and 4.1% below the 50-day, but remains up 5.1% over the 250-day average.
- 52-Week Range: Shares are 35.8% above their 52-week low, yet 7.8% below their 52-week high.
| Moving Average Comparison | Difference (%) |
|---|---|
| 20 Day vs 50 Day | +0.3% |
| 20 Day vs 250 Day | +9.9% |
| 50 Day vs 250 Day | +9.6% |
Bottom line: Despite the pop on this options trade, IWM’s price remains under most key averages in the short term, signaling that recent momentum has stalled.
IWM Has Consistently Underperformed SPY Across All Key Timeframes
| Duration | IWM Return | SPY Return |
|---|---|---|
| Today | +0.1% | -0.7% |
| 2 Weeks | -5.1% | -3.2% |
| 1 Month | -4.3% | -0.5% |
| 3 Months | +2.9% | +3.0% |
| 6 Months | +11.6% | +11.9% |
| 1 Year | +3.0% | +14.1% |
| YTD | +6.2% | +13.7% |
| 3 Years | +31.9% | +73.0% |
| 5 Years | +37.4% | +92.4% |
IWM’s performance relative to the broader S&P 500 (SPY) has been muted—not only over the past year (+3.0% vs SPY’s +14.1%), but also across 3-year and 5-year horizons.
Takeaway: A Bullish Bet with Mixed Signals—Is IWM Due for a Breakout?
This outsized call spread trade—placed as IWM bounced slightly higher—shows that at least some large traders see potential for near-term upside, in line with a strong bullish options skew. Yet technical momentum and recent price action continue to reflect weakness, especially compared to large-cap stocks in SPY.
With the November 28 expiration only 10 days away, IWM would need a notable rally above $242 for the buyers to maximize gains. Will the option skew prove prescient—or is the move too aggressive given recent underperformance?
If you’re curious about other sizable spreads or want to screen for similar trades, visit the Multi-Leg Option Trade Screener here for up-to-date opportunities.
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