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Options Are Bearish on This Home Builder

Lennar is seeing a feeding frenzy of bearish options trading, as hedge fund managers circulate rumors that the homebuilder has hired a bankruptcy law firm.

More than 11,600 puts changed hands Wednesday morning in the first 30 minutes of trading alone, dwarfing the average volume of 2,300 contracts for a full session.

The activity was focused on the March 5 strike, where some 8,400 puts traded against open interest of 2,130 contracts, according to OptionMonster's tracking systems.

  • Who Owns Lennar Now?

Bankruptcy rumors involving Lennar have surfaced before, and there is no indication that there is any support for this latest chatter. In fact, despite this talk and the bearish options action, LEN stock is up 6 percent in midday trading to $6.46.

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Major Home Builders:

KB Home

D.R. Horton

Toll Bros.

Hovnanian Enterprises

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Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.

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