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Bulls are constructive on Masco

David Russell (david.russell@optionmonster.com)

Housing supplier Masco has been fighting higher, now the bulls are getting constructive on the name.

optionMONSTER's Heat Seeker tracking program detected the purchase of more than 2,000 January 21 calls yesterday, most of which priced for $2.14, against previous open interest of just 162 contracts. Later in the session, almost 2,000 October 22 calls were bought for $1.20 to $1.35.

Long calls lock in the price where investors can get buy a stock, allowing them to cheaply position for a rally and potentially enjoy significant leverage. That's exactly what happened a week ago when optionMONSTER subscribers doubled their money from a small move in Masco's shares. (See our Education section)

MAS fell 0.32 percent to $21.72 yesterday. Shares pulled back recently but have remained above their 50-day moving average, which could make some chart watchers expect further gains.

Yesterday's housing starts and building permits were weak, but Monday's NAHB homebuilder sentiment index beat expectations. In addition, mortgage applications have been showing signs of life recently.

Total option volume in Masco was 6 times greater than average yesterday, with overall calls outnumbering puts by more than 50 to 1.

(A version of this post appeared on InsideOptions Pro yesterday.)

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