Bears hit Masco as housing struggles

By David Russell,

Shutterstock photo

The housing space has been showing signs of weakness, and bears are circling building supplier Masco.

optionMONSTER's Depth Charge monitoring system detected the purchase of about 4,000 January 17 puts for $0.66 and the sale of a similar number of January 14 puts for $0.11. That translates into a cost of $0.55.

The investor is apparently opening a new bearish put spread , setting himself or herself up to collect $3 if MAS plunges to $14 or lower by early next year. Based on their entry price, they'd earn roughly 440 percent from that move. (See our Education section for more on how to leverage price swings with options.)

MAS is down 0.86 percent to $19.66 in afternoon trading, bucking a gain of more than 1 percent in the broader market. The maker of Bristan faucets and Behr paint has lagged along with other housing-related stocks in the last month as rising interest rates sap enthusiasm for real estate.

Our researchLAB analysis tool shows that the group has been struggling since mid-2013 despite strong financials, with investors apparently anticipating that conditions will worsen this earnings season. MAS is one of the first to report, scheduled for after the closing bell on Oct. 28.

MAS also double-topped near $23 in May and September, which could make some chart watchers think it's ready to tank.

Overall option volume is 6 times greater than average so far in the session, according to the Depth Charge. Puts outnumber calls by a bearish 25-to-1 ratio.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: MAS

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