Beazer Homes USA, Inc (BZH) is a home builder in 16 states in the U.S. The company designs sells and builds single and multi-family homes. Shares of the company’s stock are currently trading around $19.60 in a 52 week range of $13.91-$23.29. The stock has been performing well this year having added over 15% to share prices year to date. Unusual option activity yin BZH today would suggest that traders believe this uptrend is going to continue through the end of the year. Early in today’s session a trader sold 4,732 BZH Dec 18 puts for $0.20. This is an extremely bullish trade that also represents volume in BZH 2.1 times the average daily option volume in the name. This trade also carries a relatively high level of risk meaning this trader has a high level of conviction. Although this is a bullish trade this trader isn’t necessarily betting on the stock rallying. This trader is expressing a strong view that the stock will close above $18.00 on December expiration. With the stock trading in bullish territory according to the Ichimoku Cloud we believe that this order provides a great signal for a covered call in BZH.
Trade: Buying 100 Shares of BZH at $19.60 for every Dec 18 Call Sold for $1.85
Reward: $25 per 1 lot
Breakeven: $17.75
If shares of BZH close above $18.00 on December expiration this trade will net its maximum potential profit of $25 per 1 lot. This trade will also profit anywhere above $17.75. Should shares of BZH close above $18.00 on expiration this trade will net an annualized return of 22.5%.
