Options Loving This Home Builder Stock

Options trading turned bullish in Lennar Monday, after Citigroup predicted that the homebuilder will survive the housing bust.

Call volume surged to 12,428 contracts, more than triple the 20-day average, OptionMonster's tracking systems show. Most of the activity focused on the June 11 calls, which changed hands 7,354 times for $0.35 to $0.70 against open interest of just 626 contracts.

Market Driver:

  • Lowe's Profit Beats; Raises Forecast

In the largest trade, an investor purchased 5,700 calls for $0.60. Overall call volume in LEN exceeded puts more than 4 to 1, reflecting a generally bullish sentiment.

LEN stock is up 14.75 percent to $10.11 as of this writing. Today's options activity indicates that traders are counting on the stock reaching at least $11 by the time contracts expire in mid-June.

Citigroup upgraded the stock to "buy" with a $12 price target, saying a recent $400 million bond sale improved the company's liquidity and increased the chances of it surviving the housing crisis.
(Contd.)

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Separately, real-estate stocks rallied after the CEO of home-improvement chain Lowe's said the market was beginning to bottom in some places.

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Rival Home Builders:

Toll Brothers

DR Horton

Pulte Homes

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David Russell is a reporter and writer for OptionMonster.

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