Housing stocks have been coming to life, and yesterday the bulls targeted Pink insulation maker Owens Corning for a long-term trade.
optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,010 January 2016 45 calls for $1.50 and the sale of an equal number of January 2016 30 puts for $1.70. The volume was more than 9 times the previous open interest in the strike.
The transaction brought in a small credit of $0.20, but its real purpose is to leverage a rally in the company, whose other products include roofing and ducts. Both legs will profit from OC moving higher and lose money if the stock falls.
The trade will become worthless if shares remain in their recent range between $30 and $45, so the investor is clearly looking for a breakout. And if they fall below $30, he or she will be on the hook to buy the stock at that level. (See our Education section for more on long calls and short puts .)
OC rose 3.05 percent to $37.16 yesterday, the stock's first close above its 200-day moving average since June. Total option volume in the name was 14 times greater than average in the session.
The Heat Seeker also detected highly bullish activity in the SPDR S&P 500 Homebuilder Fund , which tracks the broader industry group.
More From optionMONSTER