Call buyer is staying bullish on Lennar

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Lennar is pulling back after hitting a three-year high yesterday, but one investor remains bullish on the homebuilder.

A trader sold 2,908 November 38 calls for $1.43 and bought 3,150 December 40 calls for $1.53, optionMONSTER's Heat Seeker system shows. Volume was below open interest in the November options but above it in the December contracts, indicating that a trader is rolling a long call position forward to a higher strike price.

This means that the trader is paying a net $0.10 to get another month for the strategy to work. It is a bullish move because, rather than simply pocketing the premium from the November calls, the trader is buying the higher-strike December contracts in the belief that the stock will rally further. (See our Education section)

LEN is down 1.46 percent to $38.48 in midday trading, a day after reaching $39.33, its highest intraday price since June 2007. The stock began 2012 just above $20 and has been soaring ever since then as the housing market has shown increasing signs of recovery.

The call buyer is now looking for shares to gain roughly 8 percent by expiration in five weeks. The trader could sell those options earlier if premiums rise with a rally before then, but the calls will expire worthless if the shares don't rise.

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