OptionsHouse

Options Trading News

January 8, 2013  Tue 2:14 AM CT

LEN: SEE CHART GET CHAIN FIND STRATEGIES
Time is money for one investor in homebuilder Lennar.

optionMONSTER's screening programs detected a trade in of 3,150 February 41 calls for $1.73 against open interest of 3,429 contracts. Less than a minute later, an equal number of May 44 calls were sold for $2.04 but volume was below open interest in those.

It appears the investor owns LEN shares and is using the options as part of a covered call strategy. The trader was on the hook to sell their stock for $41 if it closed above that level on February expiration, but he or she adjusted it to the higher strike.

The investor now stands to make an additional $3 on the equity while collecting an additional $0.31 of income. In return for that extra money, the trader agreed to remain in the position for an additional three months. (See our Education section for more on how to profit from the passage of time.)

LEN rose 2.46 percent to $41.22 yesterday. Shares are up 100 percent in the last year amid improved sentiment toward homebuilders, and yesterday's trade reflects a belief that it will continue to work its way higher.

The transaction also pushed total option volume in the name to quadruple the daily average.
Share this article with your friends


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

Premium Services

Archived Webinar

Education & Strategy

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.

View more education articles »