Lennar Spikes on Call Activity?

I cannot really find any news to explain why Lennar (LEN) is spiking today … but we don’t really need news in this type of environment. Almost every stock is a winner, just buy and wait for your day to hit the jackpot.

As I search the intertubes, this seems to be the only explanation:

Call options on the homebuilding company are in high demand this morning with shares of Lennar Corp. trading higher by 4.75% to $18.10 as of 10:45 am (ET). Near-term bullish investors coveted 4,200 now in-the-money call contracts at the April $18 strike for an average premium of $0.20 apiece. Optimistic individuals long the calls stand prepared to profit if Lennar’s shares rally through the average breakeven share price of $18.20 ahead of expiration day on Friday.

Bullish sentiment spread to the higher May $19 strike where 2,900 call options were picked up for an average premium of $0.45 per contract. Lennar’s shares must increase at least 7.45% over the current value of $18.10 in order for investors to make money above the average breakeven share price of $19.45.

Finally, uber-bullish individuals purchased 1,300 calls at the May $20 strike for an average premium of $0.25 each. Investors long the May $20 strike calls profit if the homebuilding firm’s shares rally 11.9% to exceed the breakeven point on the calls at $20.25 by May expiration day. The surge in demand for call options on Lennar Corp. boosted the stock’s overall reading of options implied volatility 9.8% to 45.89% in the early hours of the trading session.

Disclosure: Long Lennar but shrugging shoulders in fund; no personal position

About Mark Hanna 543 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

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