Call buyer sees hope for Hovnanian
Mike Yamamoto | email@example.com
optionMONSTER's Heat Seeker system detected the purchase of 4,900 August 5 calls in less than 10 seconds yesterday for $0.55. This is clearly fresh buying, as the volume was well above the strike's open interest of 1,654 contracts before the trade appeared.
These long calls, which lock in the purchase price for the stock, will track the share price closely because they are in the money. They are looking for HOV to rise above $5.55 by expiration in mid-August but will rapidly lose value if the shares don't advance in coming weeks.
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HOV fell 4.11 percent yesterday to close at $5.36, right at its 200-day moving average. The sector had run up to multi-year highs with the housing recovery but has been hit hard in recent days on fears that rising interest rates will curtail demand.
Total option volume in the name was 16,681 contracts, 7 times its daily average for the last month. Calls outnumbered puts by more than 10 to 1, a further indication of the session's bullish sentiment.