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Options Action: Predicting the Housing Bottom?

When big bets get placed, the options market is usually where you see the activity first.

Mike Khouw of Cantor Fitzgerald spotted a big wager Thursday. There was a "substantial" opening seller of the Oct. 14 puts on Lennar Corp.

***MIKE'S TRADE****
Sell Oct. 14 puts at 60 cents

Khouw also likes this trade because selling the put yields over 4% in the next 37 days before expiration. Of course the downside risk is that you must get long Lennar at $13.40 (if the put option is exercised) but Khouw considers that a good entry point on a stock that could be bottoming out.

Learn more about this trade, watch the video now!



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Trader disclosure: On Sept. 9th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merc; Terranova Owns (APA), (AXP), (ARUN), (AAPL), (BMO), (RSH), (FCX), (GS), (IBM), (JOYG), (MRVL), (ORCL), (C), (POT), (GLD), (XBI), (SU), (X), (UPL), (SPLS), (OXY), (QCOM)

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DLUEY)
Virtus Investment Partners own more than 1% of (DRYS)

Brian Kelly
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (ALK)
Accounts managed by Kanundrum Capital own (RAX)
Accounts managed by Kanundrum Capital own (DRIV)
Accounts managed by Kanundrum Capital own (ORI)
Accounts managed by Kanundrum Capital own U.S. Dollar
Accounts managed by Kanundrum Capital own Swiss Franc
Accounts managed by Kanundrum Capital own Japanese Yen
Accounts managed by Kanundrum Capital is short (XLF)
Accounts managed by Kanundrum Capital is short (IXG)
Accounts managed by Kanundrum Capital is short (MCO)
Accounts managed by Kanundrum Capital is short (IAI)
Accounts managed by Kanundrum Capital is short (AFL)
Accounts managed by Kanundrum Capital is short the Euro
Accounts managed by Kanundrum Capital is short the Australian Dollar
Accounts managed by Kanundrum Capital is short the British Pount

For Jamie Baker
JPMorgan Chase owns 1% of (LCC) Shares outstanding

(LCC), (ALK) (AAI) are investment banking clients of JPMorgan Chase

An employee of JPMorgan Chase sits on the board of (ALK)

For David Riedel
***No Disclosures***

For Jon Najarian
***No Disclosures***

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