Bearish spread in homebuilders
Chris McKhann | firstname.lastname@example.org
optionMONSTER systems show that 10,000 each of the October 17 and 21 puts traded yesterday. The 21 puts were bought for $0.98 and the 17 puts were sold for $0.08. Both traded well above previous open interest at their respective strikes, clearly indicating new activity.
This vertical spread cost the trader $0.90, which is the maximum risk if ITB remains above $21. The maximum potential gain is $3.10 if the stock is below $17 at that time. (See our Education section)
The ITB was down fractionally at the end of the day to $21.24. The exchange-traded fund has been trending downward from above $26 in May and reached their lowest levels of 2013 last week.