Markets

Why one big bear is stalking Hovnanian

At least one bear continues to stalk Hovnanian Enterprises, one of the weakest companies in the homebuilding industry.

optionMONSTER's Depth Charge tracking system detected the purchase of almost 2,000 September 1.50 puts for $0.10. The November 1.50 puts were also bought for $0.15. Volume was above open interest in both strikes, indicating that new downside positions were opened.

HOV is down 0.46 percent to $2.15 in morning trading and has lost more than half of its value in the last six months. The company carries a heavy debt load, has a negative book value, and has mostly reported losses since the housing bubble collapsed more than three years ago.

The last financial on June 8 reported showed continued weakness, with revenue and orders both falling more than 10 percent. Its bottom line was also worse than analysts had expected. The next release date has not yet been announced.

Short interest stands at a hefty 30 percent of the float, so some traders clearly think it will continue lower.

News in the housing market continues to be mixed: The Case-Shiller Index released today showed prices steady in May, although new-home sales fell 1 percent in June, according to separate data from the Commerce Department.

Overall option volume in HOV is 4 times greater than average so far today, with puts outnumbering calls by more than 130 to 1.

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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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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