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RYL - $66.76 Ryland Group ** No stop **

Thank you Smith Barney. RYL hit a high of $70.77 on Wednesday morning and traded as low as $64.51 on Friday after the downgrade by Smith Barney. Our entry target was $65. While a -$6 drop is significant it is not material in the homebuilders. The $65 level was first level support from last week and I believe we got a good entry. The key will be how many traders buy the dip. If other brokers gain confidence after the Smith Barney downgrade then we could see some piling on but with homebuilders and oil the only real sectors with gains I am betting against it. The insurance put is only March so we will want to see some upward movement pretty quickly or we will abandon the play. Every dip in the past six months has been quickly bought.

Ryland is one of the countries largest homebuilders and was recently added to the S&P-500. Ryland currently builds in 27 markets across the country and also acts as a mortgage lender. Net income has increased +400% over the last four years and estimates are continuing to increase but RYL trades at a PE of only 10. Ryland sold 16,880 homes in 2004, which was an increase of 1,683 over the prior year.

They recently announced 13 new planned communities around Las Vegas, currently the fastest growing market in the U.S.

Ryland will be presenting at the Wachovia Securities Consumer Growth Conference on Feb-17th in Florida.

2006 $70 LEAP Call YRX-AN @ $7.90

Insurance put
Mar-$60.00 Put RYL-OL @ $0.80

Entry $65.00 (02/11)

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