Options Trading News

Shares of Beazer Homes are popping today, while a huge trade is apparently looking for the stock to stay trapped in a range.

BZH is up 5.9 percent to trade at $2.87. The homebuilder has been rallying for the last couple of weeks off support at $2.25, which was tested at the beginning of the month. That was the lowest level for the stock this year as shares have come off at 52-week high of $3.98 set in early February.

More than 21,000  BZH options have traded already today, compared with a full-day average of 1,000. The volume is almost entirely in an August combination trade.

optionMONSTER systems show that 10,000 each of August 3 calls and puts traded at volume that is above the open interest at both strikes. The calls traded for $0.23 and $0.22, while the puts went for $0.35.

Both contracts were apparently sold at the bid price, so this appears to be a short straddle position. The trade takes in a credit of $0.575 and would see a maximum profit with shares right at $3 at expiration.

This also may be a delta-hedge bet that the volatility of the stock will be less than that implied by the options. The implied volatility of those options is 65 percent, while the 30-day historical volatility is 58 percent and the 10-day reading is below 53.