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April 3, 2014  Thu 4:14 AM CT

PHM: SEE CHART GET CHAIN FIND STRATEGIES
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.
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Options Academy: Ron's Risk Calculation--A Real Life Example

It is rare that I get a chance to give a real-life, real-time example in my articles that the readers were not only following but were actually involved in at the time the event is happening. Well, that is where we are right now in our QQQ trade from last week. Let's recap the trade itself.

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