NEW YORK -- Homebuilders have taken a hit recently, but option traders were bullish on the sector on Thursday. 

OptionMonster's Heat Seeker system detected unusual call buying across the industry. Ryland (RYL) appeared first as traders amassed over 9,000 June 42 calls for $1.40 to $1.60. Then Lennar's (LEN) - Get Report August 48s traded more than 5,000 times for $2.03 to $2.12. Volume was more than 20 times open interest in both, an indication new money was put to work. 

Calls lock in the price where a stock can be purchased, letting investors position for a rally with limited risk. Their low cost can also generate significant leverage on a%age basis if shares climb. 

Ryland rose 2.54% to $41.63 on Thursday and Lennar gained 2.61% to $46.47. Both have fallen more than 14% from long-term highs reached early last month as interest rates rose and other consumer-discretionary areas retreated. 

Total option volume was twice the normal amounts in Lennar and nine times above average in Ryland. Calls outnumbered puts by a wide margin in both. 

Owens Corning (OC) - Get Report, the maker of Pink insulation, followed later in the session when 5,077 January 42 calls were bought for $2.60 and an equal number of January 47 calls were sold for $1.10. Volume was below open interest at the higher strike, so long calls may have been rolled lower or a new vertical spread was opened. Either way, the trade was bullish.

 -- Written by David Russell of OptionMonster

Russell has no positions in the stocks mentioned