Homebuilding Stock Pops on Berkshire's Additional Stake

The security boasts an over 41% year-to-date lead

Digital Content Manager
Aug 15, 2023 at 10:08 AM
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Warren Buffett's Berkshire Hathaway (BRK) is setting its sights on homebuilders. The conglomerate yesterday revealed additional stake in D. R. Horton Inc (NYSE:DHI) in a regulatory filing, bringing its investment to 5.97 million shares worth over $700 million. At last check, DHI is up 2.3% at $126.17.

The security has been consolidating below the $129 level after its July 20, record high of $132.19. Meanwhile, the 50-day moving average has contained multiple pullbacks since April. Year-to-date, DHI is up 41.9%.

Options bulls are already chiming in. So far, 1,472 calls have already been exchanged -- five times the intraday average -- compared to just 798 puts. Most popular is the August 127 call.

At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day call/put volume ratio ranks higher than 86% of readings from the past 12 months. This indicates long calls have been much more popular than usual of late.

Those looking to speculate on D. R. Horton stock's next moves should consider doing so with options. The stock's Schaeffer's Volatility Index (SVI) of 29% sits in the 16th percentile of annual readings, indicating these options traders are pricing in low volatility expectations.

 

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