6 Options Trades You Can Be Thankful For
OptionsZone Experts, November 19, 2009
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#6 SPDR S&P Homebuilders Puts
By Michael Shulman
The biggest bunch of turkeys out there is the homebuilders (actually, a group of turkeys is known as a rafter or gang).
President Obama just signed the Worker, Homeownership and Business Assistance Act of 2009 into law, which renewed the first-time homebuyer tax credit until next April. This bill also gives tax breaks to big companies to offset losses in the past two years, and the homebuilders will be among the biggest beneficiaries. Looks like Congress found another great way to spend our tax dollars!
But other than this, there are no visible upside catalysts for this industry except misleading numbers. And there is little hope for a real housing rebound until 2012. So keep an eye on the SPDR S&P Homebuilders (XHB).
Don't go short today, but consider buying put options on this ETF when Wall Street comes to its senses and the dismal reality of this sector sets in. And once you get in, be sure to use stop-losses. I think this play will eventually yield some nice profits for the patient trader, and if I'm wrong, I will eat Thanksgiving crow. (Did you know a group of crows is called a murder? Seems appropriate.)
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