Jeff Bishop of TopStockPicks.com said the current rally in small-cap stocks and the iShares Russell 2000 ETF (IWM) has been fueled by short-sellers covering their positions, and speculation of a tax deal getting done to help small companies. Both, he said, are about to end, which means that the time to short the IWM — or to use the Direxion Daily Small Cap Bear 3X Shares (TZA) — is now. Bishop on Tuesday bought 100 Oct. 20 put contracts on IWM and 2000 shares of TZA as a starter position; he plans to buy more as a one- to five-day swing trade if the Russell 2000 trades down 3 percent from current levels.

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Jeff Bishop is lead trader at TopStockPicks.com, running short-term trading strategies primarily using ETFs and stock options. At the time this conversation was taped on Sept. 26, he had 100 Oct. 20 put contracts on IWM and 2,000 shares of TZA and he was planning to buy more as he described in the interview. The Raging Bull podcast features experts from the site talking with Raging Bull editor Chuck Jaffe on his show, “Money Life with Chuck Jaffe.” You can learn more about Chuck’s daily hour of market and personal-finance chat at MoneyLifeShow.com; you can subscribe to the Raging Bull podcast via iTunes and other podcast providers.

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