Unusual Options Activity In D.R. Horton

D.R. Horton, Inc. operates as a homebuilding company in East, Midwest, Southeast, South Central, Southwest, and West regions in the United States. It engages in the acquisition and development of land; and construction and sale of homes in 27 states and 81 markets in the United States under the names of D.R. Horton, America’s Builder, Express Homes, Emerald Homes, Freedom Homes, and Pacific Ridge Home.

Last week, Susquehanna Financial Group analyst Jack Micenko downgraded D.R. Horton rating the company Neutral from Positive.

Yesterday, the homebuilder stocks declined after sales of previously owned U.S. homes fell more than forecast in March.  The reported marked the fourth time in five months that home sales fell.  Also yesterday, KBW cut its rating on D.R. Horton shares citing a choppy spring selling season.


D.R. Horton Inc. DHI is scheduled to report second-quarter fiscal 2019 results on Apr 25, before the opening bell.  During the company’s first-quarter earnings report, the company failed to meet Wall Street expectations.

So with all the negative news and downgrades, why did the Smart Money buy a ton of the May 17thoption calls with a strike price at $50 yesterday?

This one has me really puzzled.  We can’t say the stock is oversold or that the sentiment in the sector is down because D.R. Horton has rallied 34% in 2019.

In addition, there is resistance at $47.50 in which price would have to overcome, which would mean, earnings results would have to exceed expectations.

And maybe that might be the case, look at all the open bullish option contracts at the other strike price.

I guess that’s why they are called Smart Money, they have info we don’t have, but this is one I wouldn’t touch with a 10 ft. pole.  Nevertheless, I will be eagerly watching when they report on Thurs. morning. 

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