Learn the trade here. Make it on tradeMONSTER

Options Trading News

July 26, 2013  Fri 3:16 AM CT

PHM: SEE CHART GET CHAIN FIND STRATEGIES
A huge trade is apparently betting on a ceiling in shares of homebuilder PulteGroup, which plunged after reporting poor quarterly results yesterday.

optionMONSTER systems show that a trader sold 20,000 January 19 calls for the bid price of $1.13 against previous open interest of 25,259. At the same time, he or she bought 20,000 January 22 calls for the ask price of $0.52 in volume that was 10 times the open interest at that strike, so it is a new position.

This could be a roll, with the trader closing the lower-strike calls and opening a new position at the higher strike. But given how far both are out of the money, this appears to be credit spread. In that case, the trader is taking in $0.61, which will be kept as profit if PHM remains below $19. (See our Education section)

PHM dropped 10.3 percent to end the session at $16.55, its lowest close since mid-December. The company, which has been hit hard along with other homebuilders because of rising interest rates, fell sharply right out of the gate yesterday after missing second-quarter estimates on the top and bottom lines.
Share this article with your friends


Related Stories

PHM

PulteGroup bulls looking for more

October 30, 2014

The homebuilder has run quickly higher from its lows, and traders are looking for more by snapping up November calls.

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Free Webinar Series

The 100K Challenge

Education & Strategy

Anatomy of a butterfly

One of the many esoterically named option strategies is known as a "butterfly." But don't be fooled: Like other advanced...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER