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Buyers want to call Ryland home

David Russell (david.russell@optionmonster.com)

The bulls are moving into Ryland Group before earnings come out tonight.

optionMONSTER's Heat Seeker monitoring program detected the purchase of some 2,000 August 42 calls, first for $1.85, followed by smaller prints for $1.50 after the shares pushed lower. Volume was more than triple previous open interest at the strike, indicating that new positions were initiated.

These long calls lock in the price where shares can be purchased in the homebuilder no matter how high they may go. That lets investors cheaply position for upside with significant leverage and avoid big losses if it drops. (See our Education section)

RYL rose early, but then pulled back as the rest of the market pushed lower. It's now down 1.38 percent to $40.62 in morning trading.

The company's last three earnings reports have beaten expectations. Like many homebuilders, it rallied strongly in 2012 and has been consolidating this year. It's also been making higher lows along its 200-day moving average, which could make some chart watchers think it will continue to advance.

Total option volume is quadruple the daily average so far today, with calls outnumbering puts by 19 to 1.

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