Options Traders Gear Up for Lennar Earnings

LEN call buying hasn't been as popular as normal

by Josh Selway

Published on Jan 6, 2020 at 3:17 PM

Traders will have some earnings releases to consider this week, including results from homebuilder Lennar Corporation (NYSE:LEN). The company is scheduled to report earnings before the open this Wednesday, Jan. 8, and bulls will be hoping for a repeat of last quarter's performance, when the stock gained 3.8% the day after earnings. What's more, the equity added 7.9% post-earnings in January of last year.

Turning to the options pits, traders this time are pricing in a 7.2% swing after Wednesday's report, compared to an average post-earnings move of 5% for LEN over the past two years. As for sentiment, traders have continue to target calls over puts, based on the 10-day call/put volume ratio of 1.66 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). However, this reading ranks in just the 29th annual percentile, so the level of call buying versus put buying has actually waned a bit recently. From a broader standpoint, peak open interest is at the January 2020 60-strike call.

On the charts, Lennar was last seen trading up 2.9% at $58.12, which is setting the stock up for its best day since October. The shares are now testing their 80-day moving average, after they already topped their 20-day moving average for the first time Dec. 11. Overall, LEN is up 41.2% on a year-over-year basis. Analysts keep weighing in bullishly, too, with Evercore ISI moving its price target up to $66 from $64 this morning. 

len stock jan 6

 


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