In today’s Flow Show, Steve Strazza highlighted the strength we’re seeing in the homebuilders sector. I immediately liked it because I don’t have any homebuilding stocks in my portfolio, which needs to be corrected.
Last week, Lennar Corp $LEN released earnings, and the market pretty much yawned. I like that. Because the other name that we liked better — D.R. Horton $DHI — hasn’t yet released earnings (scheduled for July 18th) and unless they come out with something truly shocking, my bet is the market will be similarly unfazed. This tells me there’s an opportunity to take advantage of some overpriced options premiums currently being bid into $DHI options.
We like $DHI to make a run back to all-time highs, and we want to be long the November 170 calls. But we will sell some overpriced options to help us finance the trade.
Here’s the Play: [Read more…]