Beazer Homes and PulteGroup saw heavy call buying on Friday, suggesting that the bulls are house hunting this summer.
Calls outnumbered puts by more than 4 to 1 among homebuilders, the most bullish activity among any industry group in the session, according to our Heat Seeker monitoring system.
Investors snapped up 7,000 November 5 calls on BZH for $0.30 to $0.35, with most of the contracts pricing at the upper end of the price range. They also sold about 2,000 November 4 puts for $0.55. The shares, down 38 percent from their peak on May 1, fell 1.46 percent to $4.06 on Friday.
In PHM, they purchased the January 2012 12.50 calls, mostly for $0.90, and the October 10 calls, mostly for $0.27. Almost 11,000 contracts traded between the two strikes. The stock closed up 1.29 percent at $8.67.
The trading was noteworthy because BZH and PHM led the charge. Those names are usually in the middle of the most-active list for the sector.
Both companies have significantly underperformed the broader homebuilding sector over the last three months and have been heavily targeted by the bears. Short interest in BZH, for instance, represented a hefty 35 percent of the float as of July 15, and in PHM it was 16 percent.
The call buying in BZH came one day after the company reported a wider-than-expected loss. Last Wednesday PHM earnings and revenue both exceeded analysts' forecasts.
(A version of this post appeared on InsideOptions Friday. Chart courtesy of tradeMONSTER.)
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