Markets

How one large trader is playing Lennar

One large investor is throwing in the towel on Lennar.

optionMONSTER's tracking systems detected the purchase of 12,000 September 18 puts for $4.78 and the sale of an equal number of September 13 puts for $0.95. Volume was below open interest in the higher-strike contracts, suggesting that an existing short position was rolled to the lower strike.

The investor had probably sold the options in recent weeks, betting that the homebuilder would hold its ground. But it broke support and dropped along with other stocks, putting the position deeply in the red.

Rather than hoping for LEN to rebound, the trader got out by purchasing the 18 puts. Selling the 13s offset some of the cost, but the investor is still probably facing a big loss.

The trade pushed overall option volume in the name is 4 times greater than average. LEN is down 9.06 percent today to $13.35 and has lost 29 percent of its value in the last month.

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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