PHM - Pulte Homes through its subsidiaries, engages in the homebuilding and financial services businesses primarily in the United States. The company's homebuilding business involves in the acquisition and development of land for residential purposes within the continental United States and Puerto Rico; and the construction of housing on such land for the first-time, first and second move-up, and active adult home buyers. PHM is in one of the most battered down sectors and is technically healthy. Jim Cramer had the CEO on a week ago and he impressed me with their apparent strong balance sheet.
Because of the risky nature of the housing sector I am only suggesting selling a half position. Notice that the max return meets our goal for the account size. While we could be more aggressive and sell the 15 strike the Oct 12.5 offer enough risk premium. The 50 day moving average, currently at 13.53, will be the first level of support and therefore be our dynamic stop loss support level. If the price of the put exceeds $1, then the ratio stop loss will be initiated.