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Russell 2000
Index Options & Futures Trading
RUT is the
symbol for options based on the Russell
2000 (RUT) Index, a leading benchmark for the performance of small-capitalization
stocks. Options on the Russell 2000 have a $100 multiplier, so that,
for example, if the Russell 2000 price is at 480, an investor might
consider hedging a $48,000 small-cap portfolio with one RUT option.
Russell 2000 Index Options
Contracts & Futures Trading Contracts
|
Securities |
Issuer |
Type |
Symbol / Root |
|
Russell 2000 Index Options |
CBOE |
Options |
RUT |
|
Russell 2000 |
CME |
Options
on Futures |
RL |
|
Russell 2000 |
CME |
Futures |
RL |
|
About the Russell 2000
Index Methodology
The Russell 2000
Index was created in 1984 by Frank
Russell Company and was designed to track the performance of small-cap
companies. RUT options, trading exclusively at the Chicago
Board Options Exchange, make it simple to participate in the small-cap
market.
The popularity of
the Russell 2000 as a small-cap benchmark leads to four fundamental
reasons for using RUT options:
Simplicity
Investors are able to trade a broad market by making
one RUT trading decision rather than making the many decisions involved
with investing in numerous individual stocks.
Insurance
Russell 2000 options offer a convenient and easy way
to help reduce the market risk of a broad market portfolio of many small-cap
stocks, without disrupting the make-up of the portfolio.
Predetermined Risk
RUT option purchasers risk only the premium they
pay for the option. The risk is both known and limited.
Purchasing Russell 2000
Index Options
Purchasing RUT options,
instead of buying or selling thousands of individual stocks, provides
an investor with an additional opportunity to use investment capital
elsewhere. For a relatively small percentage gain in the underlying
index, a DJX option can increase in value by a multiple of that gain,
assuming the correct option series was selected.
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