Options Trading News

April 3, 2014  Thu 4:14 AM CT

PulteGroup is trying to recover from a sharp drop, and one trader apparently believes that the homebuilder will at least hold current levels.

optionMONSTER's tracking systems detected the sale of 2,500 July 19 puts in one print for the bid price of $1.01 yesterday. This is a new position, as the volume was above the strike's open interest before the trade appeared.

The put seller will keep the $1.01 credit as profit if PHM stays above $19 through expiration in mid-July. They trader will be on the hook to buy shares if they fall below that level, but that could be part of the strategy. Investors sometimes sell puts this way in hopes of picking up shares at an effective discount on a pullback. (See our Education section)

PHM rose 0.31 percent yesterday to close at $19.69. The stock hit a recent high of $21.26 on Feb. 26 but fell to $18.39 in the next month before bouncing this week.

PulteGroup was hammered along with other builders last month when Janet Yellen raised the prospect of higher interest rates in her first press conference as Federal Reserve chair. The stocks are now trying to pick up where they left off before that last leg down.
Share this article with your friends

Related Stories


Put seller sees floor in PulteGroup

September 16, 2015

The homebuilder has rebounded since falling with the broader market last month, but shares have encountered stubborn resistance at their 200-day moving average.

Invest Like a Monster - San Antonio: October 9-10

Premium Services

Archived Webinar

Education & Strategy

The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

View more education articles »