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September 13, 2012  Thu 12:20 PM CT

PHM: SEE CHART GET CHAIN FIND STRATEGIES
Housing stocks have been strong, and one long-term investor is playing that move with PulteGroup.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 15,000 January 2014 15 calls for $3.75 and the sale of an equal number of January 2014 25 calls for $0.95. Volume was more than 5 times open interest at both strikes.

The trade cost $2.80 and will earn a profit of 257 percent if the homebuilder closes at $25 or higher by early 2014. It's known as a bullish call spread because it leverages a move between two prices.

PHM is up 2.44 percent to $15.93 in afternoon trading and is up more than 80 percent in the last three months. The homebuilder has been riding a wave of investor enthusiasm as demand for housing improves and years of losses come to an end.

Today's call spread provides the investor with exposure to a continued rally while limiting risk in the event of a pullback. (See our Education section for more on how options can be used instead of stock.)

More than 32,000 contracts have traded in PHM so far today, more than 4 times its daily average. Calls account for more than 95 percent of the total.
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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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