Sarah Wasserman (swasserman@sir-inc.com) PulteGroup, Inc. (PHM) has been in a steady downtrend for the past several months, with the stock's 20-week moving average providing a staunch technical ceiling for the shares since May. However, for the past several weeks, PHM seems to have found a floor at the $8 level, and is currently sandwiched between support at $8, and resistance at its 20-week trendline, which is located just above $8.50.
Judging by Friday's option activity, it seems that at least one trader is counting on the $8 level to hold as continued technical support for PHM. Late Friday afternoon, 9,600 November 8 puts crossed the tape at the bid price, implying they were likely sold. Open interest increased by over 10,000 contracts over the weekend, confirming that fresh contracts were added here. By selling to open the November 8 put, this option player is essentially counting on PHM to remain above the $8 level over the next five weeks.
Meanwhile, short interest on the shares jumped by nearly 5% during the most recent reporting period, and now accounts for a lofty 11.9% of PHM's total available float. However, with PHM pinned squarely between technical support and resistance, these bears are not likely going anywhere anytime soon.
At last check, PHM was hovering around $8.09.
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