Homebuilders have been trying to rebound, and one large investor
is sticking with the group.
optionMONSTER's Heat Seeker monitoring program detected heavy call
volume in the iShares U.S. Home Construction exchange-traded fund,
which holds positions in builders such as Lennar, D.R. Horton, and
PulteGroup. Activity focused on the short-term Weekly 23 calls,
with 17,343 of the contracts expiring June 27 sold for $1.25 and an
equal number bought in the calls expiring July 25 for $1.53.
lock in the price
where investors can buy a stock, allowing them to position for
gains at limited cost. Volume was below open interest in the
nearer-dated options today, which suggests that an existing long
position was closed and rolled forward in time.
In the case of ITB yesterday, making the adjustment cost $0.28 and
provided the investor with an additional month of upside exposure,
while protecting him or her from a near-term pullback because the
was lowered to 0.72 from 0.84. (See our
The ITB fell 0.97 percent to $24 yesterday but is up 4 percent
since mid-May. While housing data has been mixed, recent reports
from the Federal Reserve and MBA show increased mortgage activity.
Next week brings more related numbersl, with NAHB's
homebuilder-sentiment survey due on Monday and housing starts and
building permits on Tuesday.
Total option volume is 16 times greater than average so far in the
session, with calls outnumbering puts by more than 77 to 1.
I am long ITB shares.
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