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May 21, 2012  Mon 10:28 AM CT

BZH: SEE CHART GET CHAIN FIND STRATEGIES
Someone wants to own Beazer Homes and is using options to create a highly leveraged position.

Our Heat Seeker tracking system detected the purchase of 10,000 June 2.50 calls in the debt-laden homebuilder for $0.20. An equal number of June 2.50 puts were sold in the following seconds for an average premium of $0.18. There was barely any open interest in either contract before the activity appeared.

The position cost just $0.02 to open and will double in value for every $0.02 that BZH trades over $2.52. It will also lose money below $2.50, which makes it very similar to owning the stock.

The main difference is in cost: Today's trade allows the investor to control the equivalent of 1 million shares for less than one-hundredth of the price. (See our Education section for more on how options can be used to generate leverage.)

BZH is off 3.52 percent to $2.47 today. It more than doubled between October and February but has been pulling back since then. Now the stock is attempting to hold its ground at its 200-day moving average and the same level where it peaked twice in December, which could be leading some chart watchers to believe that it's at an attractive entry point.

Overall option volume is 39 times greater than average so far today, according to the Heat Seeker.
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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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