OptionsHouse

Options Trading News

September 6, 2013  Fri 12:21 PM CT

MHK: SEE CHART GET CHAIN FIND STRATEGIES
Housing is hot today, and the bulls are piling into Mohawk Industries.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 2,400 November 115 calls, most of which priced for $9.85. Volume was more than 12 times previous open interest at the strike, indicating that new money was put to work on the long side.

These long calls lock in the price where shares can be purchased in the company, which makes carpet, tiling, and other flooring products. That gives them potentially significant leverage to gains in the stock, letting investors position for a rally at a fraction of the cost. (See our Education section for more on how to take risks more safely with options.)

MHK rose 4.61 percent to $122.59 in afternoon trading. It's up along with other housing-related stocks after a weak non-farm payroll report for August caused interest rates to fall. If they continue to decline, it would likely buoy sentiment toward the industry.

In addition to the macro story, MHK was already in a strong uptrend. It gapped to a new all-time high over $130 last month following a strong earnings report, and is now rebounding after pulling back to its old peaks around $120. That could make some chart watchers think it will continue to advance.

Total option volume is nearly 17 times greater than average so far today, according to the Heat Seeker. Calls outnumber puts by 6 to 1.
Share this article with your friends


Related Stories

MHK

Investor raises ante in Mohawk Industries

July 21, 2016

The flooring manufacturer, which reported bullish quarterly results in May, is scheduled to announce its next earnings numbers after the close on Aug. 4.

MHK

Calls look for summer rally in Mohawk

June 27, 2016

Traders are looking for more gains in the flooring manufacturer, which reported bullish results on May 5 and is up 6 percent in the last three months.

OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Education & Strategy

Know thyself before trading

All too often people jump into market without considering some basic guidelines that have as much to do about themselves...

View more education articles »