Technical Support Building Below This Construction Stock

Large put open interest (OI) could also be supportive. In fact, D.R. Horton stock is nearing the second largest put OI level for the second month contract.

Though pessimism amongst options traders has started to unwind, puts are still outweighing calls. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), DHI’s 10-day put/call volume ratio sits at 1.13.

These options are reasonably priced at the moment, too. The stock’s Schaeffer’s Volatility Index (SVI) of 35% ranks in the low 15th percentile of its annual range, meaning options traders are pricing in low volatility expectations. DHI has tended to outperform these expectations over the past year, per its Schaeffer’s Volatility Scorecard (SVS) of 74 out of 100.

Our recommended call option has a leverage ratio of 7.5 and will double on a 12.9% rise in the underlying equity.