Housing stocks fell on yesterday's announcement from the Federal
Reserve, and option trading was mostly bearish in the space.
The central bank kept monetary stimulus in place but sounded less
worried about an economic slowdown. That caused investors to think
it will slow bond purchases, which would push interest rates
KB Home lit up optionMONSTER's Depth Charge tracking system about
20 minutes after the statement was released as traders snapped up
more 4,200 Weekly 18 puts expiring tomorrow. Most of the large
blocks priced for $0.65, and volume was more than 40 times previous
open interest at the strike.
Barely 2 minutes later, Toll Brothers saw heavy buying in the
Weekly 34 puts for $0.65 to $0.83. Volume approached 4,000,
compared with open interest of just 3 contracts.
Put buying locks in the price where a stock can be sold no matter
how far it might drop. They can used to
hedge long positions
or to make outright bearish bets. (See our
KBH fell 2.62 percent to $17.49, and TOL shed 1.64 percent to
$33.56. Both homebuilders are sensitive to interest rates, rallying
sharply as Fed bond buying drove mortgage rates lower in recent
years but struggling more recently.
Mexican cement giant Cemex has also tracked the group. It was
active late in the session but saw more positive activity. Traders
bought the December 11 calls for $0.43 to $0.44 in the afternoon,
followed by the sale of 3,400
January 2015 12 puts for $2.55. Both transactions will benefit from
shares pushing higher. CX fell 3.38 percent to $10.59.
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