Big Unusual Volume On XHB November $16 Calls, Existing Home Sales and Tax Credit Speculation (Chart, Links, 10/22/09)

Big money moved into the $XHB November $16 Calls today, probably betting on the existing home sales number tomorrow at 10:00am. Also, speculators could be placing bets on a potential tax credit extension (ACUMA Comments: Extending the $8,000 First-Time Homebuyer Tax Credit-Reuters). About 100,000 November $16 calls were bought for 0.30. On the minute chart using OptionXpress (anyone have an embeddable options chart?) showed that 40,000 and 45,800 hit at .30 at around 2:36. An institution threw $2.5 million on this trade. The trade might not be speculative, it could be hedging a voluminous short position. But lets say someones got a mil to burn and wants to see XHB over $16.30 by November 20 expiration. A total of 123,000 November 16 calls traded with 7,000 open.

On the ISE, XHB option volume was 7.6x average volume and the ISEE exploded 10,600% to 856 with 21,770 calls opened/2,540 puts opened on the International Securities Exchange. The chart is being squeezed in a triangle just above $15 support from 2008. It closed at $15.38 today just above the 50 day moving average on strong volume. RSI and MACD have been trending lower with neutral price movement, however both are hovering around the neutral 50 and 0.0 level respectively. Obviously a breakout or breakdown would be a nice trade. It's also testing the downtrend from 2007. Are these calls levering up here?

XHB Chart (Courtesy of Stockcharts.com)



Articles:
Calls go through roof in homebuilders (optionMONSTER)
SPDR S&P Homebuilders (XHB) $15.28 +3.38% (WhatsTrading)
Bullish bets placed on the home builders: XHB TOL LEN (Trading RM, LLC)

Also this is interesting: Goldman Sachs Positive On Homebuilders Ahead of Earnings/Tax Credit Extension (XHB, DHI, MTH, TOL) - (Street Insider)

Hat tip Adam Warner on StockTwits today.