Markets

Another bullish trade in homebuilders

Bullishness continues to mount in the homebuilders.

Yesterday, the activity shifted to the iShares Dow Jones US Home Construction Fund, with 5,000 September 11 calls purchased for $0.15 and $0.20 against no existing open interest. The fund owns shares in builders such as PulteGroup, NVR and DR Horton.

ITB rose 1.69 percent to $10.23 yesterday and is up 15 percent in the last week. The sector has been unusually active in recent sessions as investors hit home runs in other names including Lennar and the SPDR S&P Homebuilders ETF (XHB).

Despite having similar titles, ITB and XHB are very different funds because ITB owns companies that actually build houses. The more popular XHB mainly focuses on tangentially related names such as Bed Bath & Beyond, Home Depot and Tempur-Pedic.

The recent bullishness in the sector is taking place as home prices begin to stabilize, but most other metrics remain weak.

Overall options volume in ITB was 48 times greater than average in yesterday's session, with calls outnumbering puts by more than 100 to 1, according to Heat Seeker.

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.


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

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