Homebuilders face range-bound play
Chris McKhann | firstname.lastname@example.org
The XHB is down 1.1 percent at $25.64 today after trading as high as $26.16 on Friday, its highest level since September 2007, and closing at $25.93. Shares have more then doubled from their 52-week lows of last October.
optionMONSTER's system show that 10,000 each of the November 26 calls and puts traded for $0.84 and $1.19 respectively. The November expiration is new today and there has no open interest at that strike, so both sides of the trade were apparently sold in a short-straddle position.
This position takes in $2.03 and can profit from anywhere between $23.97 to $28.03. The trade could also make money if the stock's actual volatility is less than that implied by the options, which is 26 percent. The 30-day historical volatility is below 20 percent, just above 52-week lows. (See our Education section)