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August 14, 2013  Wed 12:19 PM CT

LEN: SEE CHART GET CHAIN FIND STRATEGIES
Lennar continues to decline along with most other homebuilders, but one trader is turning bullish today.

optionMONSTER's Heat Seeker system detected the purchase of 2,000 September 32 calls for $1.28 and the sale of 2,000 September 36 calls for $0.23. Volume was well above the previous open interest in each strike, clearly showing that this is new activity.

This bullish vertical spread cost the trader $1.05, which is the amount at risk if LEN remains below $32 through expiration in mid-September. The maximum potential gain is $2.95 if shares are anywhere above $36. (See our Education section)

LEN is down 1.4 percent to $31.71, just off its 52-week lows of a year ago. Shares were at highs and testing resistance at $44 in mid-May but have been sliding since with the rest of the sector as interest rates rise.

More than 20,000 LEN options trade today, triple its daily average for the last month. Overall calls are outpacing puts by 1.5 to 1.
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So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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