Options Trading News

September 19, 2012  Wed 9:17 AM CT

Hovnanian Enterprises is near 18-month highs, but one trader sees limited upside from here.

HOV is up fractionally on the day, trading at $3.80. The homebuilder closed at $3.89 on Monday and traded above $4 during Friday's session. Shares were below $1 back in October.

Dominating today's option activity in the name is one print in the January 2014 5 calls. A trader sold 5,000 of those contracts for $0.65, below the listed bid price on a relatively wide bid/ask spread. Open interest in the strike was 1,415 at the start of the session, so this is a new position.

The call selling was followed by large prints in the stock, as a block of 250,000 shares was bought two minutes later for $3.85. The overall position would be delta-neutral and short volatility, looking for the stock to remain around $5 and/or for the actual volatility to be less than that implied by the options. (See our Education section)
Share this article with your friends

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


The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

Options Academy: More on the Covered Call Strategy

Last week, we talked about the Covered Call and the misconceptions that surround it. We spoke about how an investor must realize that the Covered Call is actually a premium collection strategy and not so much a directional one. If an investor can grasp this idea, the investor stands to do a heck of a lot better in the strategy than they currently do.

View more education articles »