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Lennar bulls looking for more gains

David Russell (david.russell@optionmonster.com)

Lennar has bounced along with other homebuilders, and the bulls are looking for further gains.

optionMONSTER's Heat Seeker monitoring program yesterday detected the purchase of 2,700 October 41 calls for $0.80 and the sale of an equal number of October 37 puts for $0.72. Volume was more than triple open the interest in each strike.

The overall position is similar to owning shares because the trader is long calls and short puts . Both halves of the strategy have positive deltas , so they'll make money to the upside and lose to the downside. It required an initial outlay of just $0.08 and has the potential to generate significant leveraged relative to that amount. (See our Education section)

LEN fell 0.40 percent to $39.02 yesterday, but is up 7 percent in the last two weeks. Housing stocks have been strong recently thanks to generally improving industry data.

Lennar has consistently reported strong quarterly numbers. Its next release will probably come out in about a month, judging by last year's schedule.

The Heat Seeker also showed that some 4,000 November 40 calls were purchased in the company, mostly for $1.62, but volume was below open interest.

Option volume was 6 times greater than average overall in the name.

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