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January 22, 2014  Wed 3:47 AM CT

PHM: SEE CHART GET CHAIN FIND STRATEGIES
Traders apparently believe that homebuilder PulteGroup will hold current levels through its earnings report next week.

optionMONSTER's tracking systems detected the sale of nearly 3,000 Weekly 19 puts that expire on Jan. 31, mostly priced for $0.54 and $0.53. These are clearly new positions, as volume was far above the strike's previous open interest of just 385 contracts.

These put sellers are looking for PHM to stay above $19 through expiration at the end of next week. But if the stock slips below that strike price, the traders will be on the hook to buy shares at that level. (See our Education section)

The company is scheduled to report fourth-quarter results before the market opens on Jan. 30, the day before those Weekly puts expire.

PHM fell 0.83 percent to $19.20 yesterday, right at its 30-day moving average. The stock had been trending higher since hitting a 52-week low of $14.23 last August, but it has been drifting lower this month.

Yesterday's put sale pushed PulteGroup's total option volume above 9,100 contracts, more than double its daily average for the last month.
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Market Level Making You Nervous, Huh? Part 3

In last week's article, we discussed how important the extra cash you save by using the Stock Replacement Strategy over buying the actual stock is! That extra cash in our account instead of being unnecessarily tied up in a stock position allows us to buy the puts we would need to protect our downside in the case of a major sell-off.

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