The chart above, and the stock's historical volatility, can be a helpful guide in combination with fundamental analysis to judge whether selling the January 2015 put at the $4 strike for the 10% annualized rate of return represents good reward for the risks. We calculate the trailing twelve month volatility for Hovnanian Enterprises, Inc. (considering the last 249 trading day closing values as well as today's price of $6.03) to be 58%. For other put options contract ideas at the various different available expirations, visit the HOV Stock Options page of StockOptionsChannel.com.
In mid-afternoon trading on Wednesday, the put volume among S&P 500 components was 1.28M contracts, with call volume at 1.60M, for a put:call ratio of 0.80 so far for the day, which is unusually high compared to the long-term median put:call ratio of .65. In other words, there are lots more put buyers out there in options trading so far today than would normally be seen, as compared to call buyers.