I travel around the country and often meet many of our TOS customers along the way- and it seems like everyone is trading the RUT! Sure, I see the advantages to this broad-based ETF that tracks the Russell 2000. It has good open interest, is fairly liquid and has deep markets. It is $0.20-$0.50-wide with $10.00-wide strikes, has volatility, and it is supported by multiple exchanges. And the RUT's high premiums in options make it a premium seller's dream! But wait. I think that for most customers there is a better product to trade: IWM. Let me explain. What most people don't realize is that the RUT is the big brother to the IWM, as the IWM is one-tenth the size of the RUT. The IWM is also an ETF on the Russell 2000, but has better open interest. It is very liquid and has deep markets, and is $0.01-$0.05-wide with $1.00-wide strikes. It has the same volatility and is also supported by multiple exchanges. All this, combined with its high premiums in options, makes the IWM a smart premium seller's dream!

As you can see, there are some similarities between each product, but their differences are convincing enough to show you why you should take another look at IWM when considering a Russell IWM trade.

1. Trading on Expiration Friday: This is the most surprising difference- you can't trade RUT on expiration Friday! It's not open for front-month trading. All trading in the front month is closed on Thursday, but RUT settlement prices come out after all 2000 stocks are eventually opened on Friday's prices! Usually you'll find out the settlement prices at around 1pm CST, but often you can't even find out what the price is until after Friday's close. That leaves way too much market manipulation for my high-probably personality- you have no control over your positions! Hoping and praying is NOT an options strategy. What are you supposed to do? IWM's front-month strikes trade like most ETFs and expire at the close of trading on FRIDAY. Ahh...full control of my positions!

2. Tighter Markets: There are tighter markets in IWM. Individual strikes in the RUT are usually $0.20-$0.50 wide; the equivalent of a $0.02-$0.05 market in the IWM. Yet the IWM markets are mostly just $0.01-$0.03 wide. Recent $10.00-wide-strike Iron Condor markets in the RUT are $0.60 wide and often won't be filled nt the mid price, meaning you have to lower your price to execute the order. Conversely, recent $1.00-wide-strike Iron Condor markets in the IWM are $0.04 wide (the equivalent of a $0.40-wide market in RUT), and often WILL be filled at the mid price. Better fill prices means more cash in your pockets- not some money-maker's!

3. Distribution: Flexibility among strikes and price discoveries means a higher probability of success. With IWM you can trade 1-10 Iron Condors before you have the same "buying power effect" of just one RUT Iron Condor, allowing you to work orders over multiple strikes and take better advantage of market movement. The only disadvantage to trading IWM versus the RUT is higher commissions. But remember, if you do what I outlined above, you will be receiving a better price for your spread, more than making up for the higher commissions. And eventually, you'll be making 40 trades in one month and you can start receiving a $39.95 rebate check from TOS. Sweet Suite!

thinkorswim, Inc. and its employee, Tony Battista, do not solicit or recommend any form of trading in the individual stocks (or their derivatives) mentioned above. Please do careful, independent research before investing any money as well as weigh the possible consequences on your particular financial situation before doing so. The risk of loss may be substantial.