MarketIntelligenceCenter.com’s patented option-trade picking algorithm found two trade ideas on Pulte Homes Inc. (PHM) today after it traded between between $21.60 and $21.92 before closing at $21.67 on Tuesday.
For more conservative investors, consider a covered call expiring in Apr. '15 at the $21.00 level for a net debit of $19.99. This trade provides a 5.05% return in just 135 days and Pulte Homes can fall 7.75% before causing a problem.
Investors with a higher appetite for risk could take a look at a diagonal spread pairing a long position in the PHM Jan. '16 $15.00 call with a short position in the Apr. '15 $21.00 call for a net debit of $5.52. This trade offers returns of 8.70% for an annualized return rate of 24% over the same 135 days as the trade above. This trade only has 5.31% downside protection however.
Pulte Homes has moved between $16.56 and $21.92 over the last 52 weeks. Standard & Poor’s has a 4 STARS (out of 5) buy ranking and a 12-month target price of $22.00 on the stock.