Unusually Large Option Trade in PulteGroup, Inc (PHM)

We missed the deadline on this one yesterday, but wanted to alert our readers to a rather large call buy in PulteGroup, Inc (PHM) late morning yesterday.  It’s a rather unusual one given the size, the fact that earnings have already come and gone, and the short term nature calls chosen.

A trader bought over 5,500 of the August $18.50 calls in PulteGroup (PHM), paying 50 cents per contract.  That’s a total “bet” $275,000!  Now, we know you don’t bet $275,000 with no material news.  So we have to assume there is news, it just hasn’t been released to the rest of us yet.

PulteGroup, Inc (PHM) traded down yesterday, closing at $18.55 on light to average volume.

As we mentioned, PHM announced earnings on July 24, so this trade has nothing to do with leaked earnings data.  So we’re guessing that an analyst gobbled up the calls ahead of their firms upgrade or price target increase.  Several firms are famous for this activity, so we’ll have to wait for the news to see who it is this time.

PHM is covered by 20 analysts, who have a consensus rating of HOLD, with a price target of $21.79.  It’s certainly ripe for an upgrade and we suspect that could come this week.

pultegroup phm logoOf course it could just be a value play as the stock fell sharply after earnings on the 24th when it was trading up near the $20 area.

Their earnings report was somewhat mixed, but this trader seems to to know this stock is about to rebound back from the recent drop.

We like the trade based on it’s size, though we may be tempted to snap up some longer term expiration calls.

Happy Tuesday trading.