Long-Term Bears Pounce On PulteGroup, Inc. (PHM)

PulteGroup, Inc. (NYSE:PHM) is being swarmed by long-term put buyers

by Alex Eppstein

Published on Apr 23, 2015 at 1:12 PM
Updated on Jun 24, 2020 at 10:16 AM

PulteGroup, Inc. (NYSE:PHM) is getting wrecked in the wake of a first-quarter earnings miss and today's downbeat new home sales report. At last check, shares of the homebuilder were down 7.1% at $20.15, wiping out their year-to-date gains. Not surprisingly, PHM puts are in high demand, as traders wager on extended downside.

Diving right in, puts are changing hands at 15 times the usual pace at this point in the day. Most active is the January 2017 15-strike put, with all signs pointing to buy-to-open activity. In other words, these LEAPS buyers are counting on the underlying to drop below $15 -- something not done since August 2013 -- by January 2017 options expiration.

These speculators aren't the only ones with a less-than-rosy outlook on PulteGroup, Inc. (NYSE:PHM). Over half of the analysts tracking the stock rate it a "hold" or worse. However, the equity's consensus 12-month price target of $23.03 represents a more than 14% premium to current trading levels, leaving the door wide open for potential price-target cuts.

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