Lennar Stock Could Build Off Its Record Highs

The equity is up roughly 50% year-over-year

Digital Content Manager
Jul 23, 2020 at 3:04 PM
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The shares of real estate name Lennar Corporation (NYSE: LEN) are down 1.4% at $69.91 this afternoon. However, earlier today the security hit an all-time-high of $73.75, and now sports a roughly 50% year-over-year lead, with support from the 10-day moving average. More upside may be on the horizon, too, as its recent peak comes amid historically low implied volatility (IV) -- a combination that has been a bull signal in the past.

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been two other times in the past five years when the stock was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 20th percentile of its annual range or lower -- as is the case with LEN's current SVI of 46%, which sits in the 18th percentile of its 12-month range. The data shows that one month after these signals, the real estate company was higher, averaging a one-month return of 12%. From its current perch, a move of similar magnitude would put the stock just above $78, at yet another record high. 

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A look at the equity's options pits shows calls are overwhelming puts. In fact, 4,606 calls were exchanged in the past 10 days, as opposed to only 1,529 puts. On the other hand, Lennar stock's Schaeffer's put/call open interest ratio (SOIR) of 1.10 stands higher than 93% of readings from the past year, implying short-term options traders have been more put-biased than usual.

 

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