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.
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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.
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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.
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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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David Russell is a reporter and writer for OptionMonster.