Options Traders Hammer Away at Homebuilding Stock

DHI options are running at three times their intraday average

Deputy Editor
Aug 17, 2021 at 3:46 PM
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D. R. Horton Inc (NYSE:DHI) is falling from yesterday's three-month peak, down 4.8% at $93.70 at last check. Amid this negative price action, the equity is also seeing a surge of options activity. So far, 21,000 calls and 16,000 puts have been exchanged, which is three times the intraday average, with put volume running at the top percentile of the past 12 months. The two most active options are the 8/27 98-strike call and the September 80 put, with new positions being opened at both. 

While calls are still outpacing puts, this bearish options volume is a bit of a turnaround from recent trading. Leading up to today, calls have been much more popular than usual. This is per the stock's 10-day call/put volume ratio of 5.23 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 94% of readings from the past year. 

Now looks like a good time to weigh in on the homebuilding stock's next move with options. The equity sports attractively priced premiums right now, per its Schaeffer's Volatility Index (SVI) of 30%, which sits in the 15th percentile of its annual range.

The majority of analysts are bullish towards D. R. Horton stock. Of the 14 in coverage, 11 carry a "strong buy" rating, while three say "hold." Plus, the 12-month consensus price target of $113.12 is a 19.9% premium to current levels. 

The equity has seen some volatility on the charts since surging to a May 10, all-time high of $106.89. After pulling back to the $84 level, shares attempted a rally towards the $100 mark earlier this month, but ultimately fell short. Year-to-date, DHI remains up 36.8%.

DHI

 

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