Housing stocks have been trying to rebound in the last week, and yesterday the bulls piled into home builder MDC Holdings.
OptionMonster's tracking systems detected upside option activity in the October 30 calls, where nearly 2,700 contracts traded for $1.15 to $1.75. The volume was well above the strike's previous open interest of 417 contracts, indicating that new positions were established.
These calls lock in the price where shares can be purchased, letting investors benefit from gains in MDC for much less capital than buying the stock directly. The options can also provide significant leverage in a rally, but they will expire worthless if shares remain below $30 through mid-October.