Option bulls eye Standard Pac calls before results

* Traders make a beeline for Standard Pacific upside calls

* Standard Pacific option volume swells ahead of results

* Bullish action comes after strong D.R. Horton earnings

By Doris Frankel

CHICAGO, Feb 2 (BestGrowthStock) – Many bullish option investors on
Tuesday appear to be betting that shares of homebuilder
Standard Pacific Corp (SPF.N: ) will jump at least 25 percent
within the next few weeks.

It’s been a big day for options trading in Standard
Pacific, as traders exchanged about 11,000 contracts by early
afternoon, 49 times greater than its recent average daily
turnover, according to option analytics firm Trade Alert.

Trade Alert data show that directional sentiment based on
order flow was 68 percent bullish with roughly 11,000 calls
traded against only 158 puts.

Investors made a beeline for the March, June and September
call options, giving them the right to buy shares at $5 apiece
— a strike price above the current value of the stock.

On the New York Stock Exchange, Standard Pacific shares
rose 8.07 percent, or 31 cents to $4.15.

Earlier in the session bullish players paid 20 cents per
contract to buy roughly 5,000 March $5 call strikes, said
Interactive Brokers Group equity options analyst Caitlin
Duffy.

Call buyers enjoy profits if Standard Pacific’s shares
rally at least another 25 percent from the current price to
surpass the break-even point at $5.20 by March expiration.

The bullish action comes one day before Standard Pacific is
due to release quarterly results and after homebuilder D.R.
Horton Inc (DHI.N: ) on Tuesday posted its first quarterly profit
in almost three years.

D.R. Horton shares jumped 10.5 percent to $13.16. The rally
in home builder stocks, driven by pending home sales and D.R.
Horton results, pushed the Dow Jones home construction index
(.DJUSHB: ) up more than 6 percent.

Pending sales of existing U.S. homes edged up as expected
in December, the National Association of Realtors said Tuesday.
Still, home vacancies rose in the fourth quarter, pointing to a
slow recovery for the housing market.

For details see [ID:nN02230517] and [ID:nN02203495].

Standard Pacific is due to report fourth-quarter results
after the closing bell on Wednesday. Wall Street analysts
expect a profit of two cents per share, according to Thomson
Reuters I/B/E/S.

Standard Pacific’s option implied volatility, which
measures uncertainty surrounding the future direction of the
stock, jumped as a result of the demand for bullish plays.

Overall option implied volatility on Standard Pacific rose
22 percent to 100 percent near midday, according to Interactive
Brokers Group data.

“Standard Pacific is in focus for option traders today as
D.R. Horton reported very strong earnings, further indications
that the housing situation is improving rapidly,” said Joe
Kunkle, a founder of Web site OptionsHawk.com.

Investment

(Editing by James Dalgleish)

Option bulls eye Standard Pac calls before results