| | | | Record Shorts Are Squeezed Out?
First, don’t miss today’s Daily Chart Setup trade idea down lower in this newsletter.
The entire move up off the lows has seen more and more shorts getting added. Now those shorts are getting squeezed back out of their bearish
Come join me as we dive in and see what’s moving!
Plus, as always, we have stocks popping and dropping so come find out what is moving this morning as I look for stocks and do some live premarket analysis on SPX, SPY, NDX, QQQ, Russell, IWM and other stocks that are potential plays for the day.
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This Russell 2000 Options Setup Has 15-to-1 Upside If We Crash
If this next move down turns into a real flush, I’ve already got the setup in place — and it’s a spicy one. The Russell 2000 (IWM) is right in the danger zone, and the risk-reward here is nuts IF the breakdown plays out.
I’m talking about a potential $30 payout for just $2 of risk. That’s a 15-to-1 upside on a defined-risk put spread.
We’re sitting at $209 on IWM, and the setup I’m looking at involves buying the $180 put and selling the $150 put out in September. If you do it now, you could get the whole thing for around $2 a contract.
Even if the Russell pushes a little higher, this spread still has serious potential. It doesn’t require a crash tomorrow — just a clean, calculated drop over the next few months.
Why This Trade Makes Sense Right Now
This isn’t just a random lotto ticket. I’m not taking shots in the dark. IWM has been pushing right into resistance, and if it rejects here, this trade could go deep in the money.
The same pattern I flagged on the S&P 500 — five waves down followed by a weak three-wave bounce — is also possible here. That’s the kind of structure that sets up a big breakdown.
If we get that kind of move, IWM could fall all the way down into the low 150s, maybe lower. That would put this spread at full value. And even if we don’t crash that far, a drop into the 170s could still be enough to double or triple my money.
It’s defined risk. If I’m wrong, I lose the $2. But if I’m right — and we get the flush — this thing prints.
A Crash Setup Hiding in Plain Sight
This kind of setup doesn’t come around often, but when it does, you’ve got to be ready. The market is stretched. Everything I looked at in this morning’s review is at or near resistance. We’re due for a pullback — and if it’s a real one, the small caps are likely to lead the way down.
IWM is the canary in the coal mine right now and the danger zone is clear.
We’ve been here before — and when it breaks, it breaks hard. This put spread gives me a cheap way to get positioned with massive upside if the wheels come off.
I don’t need to go heavy on this. I don’t even need the crash to happen tomorrow. But if it does — and this setup hits — I’ll be glad I was already in.
Risk $2 to potentially make $30. I’ll take that all day.
Now be sure to join me live at 9:15 a.m. ET for “Morning Monster,” my market-open livestream on YouTube!
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