Today's housing data was strong, and the bullish paper is
optionMONSTER's Heat Seeker monitoring system detected unusual
activity in Toll Brothers, D.R. Horton, and KB Home late this
morning. All the trades occurred around the same time and in the
same October expiration, which suggests that it may have been the
work of a single large investor.
The TOL options hit first as 5,000 October 37 calls were purchased
for $0.75, followed by 6,500 DHI October 23s bought for $0.46. A
few minutes later, almost 8,600 October 19 calls traded in KBH for
$0.35 to $0.37. Volume exceeded open interest across the board,
which indicates new money was put to work on the long side.
lock in the price where investors can buy the stocks, ensuring they
won't miss a rally. They can generate significant leverage if
shares move in the right direction but can also quickly lose value
on a pullback. (See our
All three homebuilders are rising in afternoon trading, with TOL up
2.49 percent to $35.43, DHI up 3.03 percent to $21.77, and KBH up
3.05 percent to $17.73. Total option volume is more than twice the
daily average, with calls outnumbering puts by more than 7 to 1, in
all the names.
The group has been fighting back from a late-July slide and is hot
today after July housing starts and building permits beat
forecasts. Housing-related retailer Home Depot also blasted to new
all-time highs after reporting strong quarterly sales and profit. A
bullish trade by optionMONSTER co-founders Pete and Jon Najarian in
newsletter has doubled on the move.