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Calls stack up in Louisiana Pacific

David Russell (david.russell@optionmonster.com)

Louisiana Pacific is pulling back after a rally, and one big investor is getting constructive on the lumber stock.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 1,500 May 19 calls for $1.20. Equal-sized blocks were sold at the same time in the May 16 puts and the May 22 calls for $0.75 and $0.35 respectively.

The investor now stands to collect $3 if LPX closes at or above $22 on expiration, a profit of 2,900 percent based on the $0.10 entry cost. He or she is also on the hook to buy the stock if it falls sharps because of the short puts . (See our Education section)

LPX is down 1.33 percent to $17.79 in afternoon trading. The stock rallied strongly last month but has pulled back to the same price range where it peaked in September and October. That could make some traders think that an uptrend is taking shape. The shares also found support around $16 in November and early December, which could explain the decision to sell puts at that strike.

The company has not announced the date of its next earnings report, but last year's calendar suggests that it will come out in early February.

Total option volume is triple the daily average so far in the session, according to the Heat Seeker.

Other homebuilding-related stocks have also been strong in the last three months after struggling in the second half of 2013. 

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