Homebuilding Stock Hits 1-Year High After Earnings

A sentiment shift is occurring in the options pits

Deputy Editor
Jan 31, 2023 at 10:49 AM
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Pultegroup Inc (NYSE:PHM) stock is trading at one-year highs, up 7.8% at $56.04 at last glance, after the homebuilding name reported fourth-quarter profits of $3.63 per share on revenue of $5.17 billion, beating estimates of $2.93 per share on $4.59 billion. Higher prices for housing helped offset supply chain costs and labor shortages. 

Pultegroup stock is already up 22.8% since the start of the year, with close support at its 20-day moving average. However, the stock's 14-day relative strength index (RSI) of 71 has moved into "overbought" territory, meaning PHM may be due for a short-term drop. 

Puts have been more popular than calls over the past 10 days, with 24,000 puts exchanged in comparison to 11,000 calls. After today's earnings event, however, call volume is running at five times the intraday average, with calls more than doubling the number of puts across the tape. 

Options looks like a good way to go at the moment, too. PHM's Schaeffer's Volatility Index (SVI) of 38% sits in the 19th percentile of readings from the past year, meaning options traders are currently pricing in low volatility expectations. 

 

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