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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.
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It is rare that I get a chance to give a real-life, real-time example in my articles that the readers were not only following but were actually involved in at the time the event is happening. Well, that is where we are right now in our QQQ trade from last week. Let's recap the trade itself.

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