By David Russell of OptionMonster
NEW YORK -- Housing stocks have been active lately, and Tuesday the bulls targeted building-materials company Masco (MAS).
OptionMonster's tracking programs detected unusual activity in the name, which produces cabinets, faucets, and paint. Traders initially purchased the May 21 calls as cheap shots for 10 cents and 15 cents, some 5,000 of those eventually changed hands in volume well above previous open interest of 948 contracts. The June 21s followed soon after, with more than 2,000 pricing for 60 cents.
Long calls lock in the price where a stock can be purchased, letting investors position for a rally with limited risk. These contracts can also generate significant leverage if shares move in the right direction.
Masco rose 0.05% to $20.62 on Tuesday and is bouncing back from a poor earnings report late last month. Related names including D.R. Horton (DHI) and PulteGroup (PHM), which build homes, have also seen bullish trades in recent sessions.
Total option volume in Masco Tuesday was quadruple its daily average, with calls outnumbering puts by more than 20 to 1.
Russell has no positions in MAS.