Options Trading News

December 14, 2012  Fri 4:14 AM CT

PulteGroup has pulled back from multi-year highs in the last month along with other homebuilders, and one large trader is anticipating another drop in the next week.

optionMONSTER's Depth Charge system detected the purchase of 4,000 December 16 puts in 15 seconds yesterday, led by a single print of 3,803 that went for $0.09. The volume was above open interest of 3,135 contracts at the beginning of the day, so this is fresh buying.

The options were not tied to any stock trading identified by our scanners yesterday, though they could be a hedge against a long position established earlier. The puts could also have been bought as a straight bearish bet that PHM will decline roughly 7 percent by expiration a week from today. (See our Education section)

PHM rose 0.29 percent yesterday to close at $17.16, a day after rising back above its 50-day moving average. Shares had nearly tripled in value this year with increasing signs of recovery in the housing market, reaching four-year highs above $18 in October. The stock has fallen since then and is now facing resistance at the $17 level.

Puts outnumbered calls by more than 2 to 1 yesterday.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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