What are the communities thoughts on buying put options on home construction companies like Lennar, Beazer, Tollhouse Brother, etc.
I’ve noticed that they all have a decent chunk of unsold (quick move-in homes) that will carry over on their books on top of slowing construction due to interest rates.
The bulls are pointing out the relatively low P/E ratios (around 4-5) but I’m still skeptical.
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My builder said they’ve had multiple people walk days prior to closing.
I work for one of those. I can confirm inventory backlog issues. Closing issues etc. bleak 23′ coming don’t want to say to much
since interest rates are likely to raise for the next session it could be a decent short term play. The P/e ratio is arbitrary in this case, i would seek out the earnings growth rates are go from there.
Puts on Tollhouse. Hate those cookies. As for the builder Toll Brothers, duck them too. But yeah LEN rolled over hard today
Sell calls now, buy puts in at least 1-2 months, both sell and buy puts for a while til you think close enough to bottom or stalled thst others will be looking forward then keep buying outs and sell the fuck out of calls
Or what you see fit. I mean by this- employ your inclination/thesis for one position and the use inertia of sentiment as a weapon as well.
God this is the type of critical thinking this sub’s missing. I’m in.
Probably not the best idea now.
who has the most debt that may need to be serviced soon? Do any of them look like they may need to dilute shares to raise cash? Do any of them have a price point below 5 that pension funds may have to liquidate due to guidelines?
I would keep an eye on housing starts, commodity prices, interest rates expectations and go from there. Now I’m ready to start looking lol..
Single Home development permits are down 6% and building permits are down 2.4% last quarter safe to say puts sounds sensible.
>I think that buying put options on home construction companies is a good idea. I believe that the market for these types of companies will continue to decline, and as such, their stock prices will go down as well.
One man ran 70k into 1million he going short in CAT, you better go short with him
https://preview.redd.it/a8ehia9akw8a1.jpeg?width=664&format=pjpg&auto=webp&v=enabled&s=974a056702d4969c172bdd922ae810d1105a33a6
I have 1100 30p/April TMHC. Look at the oi on the chain, yup that’s me.
As someone who works for probably the largest material supplier nationwide (i am outside sales directly to the end user contractors) aside from pricing of materials and shortages, most of our salesmen who deal directly with framers and housing are down 20-30% yoy and doesn’t look like it’s getting any better. We have even pushed back our ipo because of probably exactly what you’re questioning. May not be a bad bet
Look from 2006 to 2009 TOL fell from 60 to 15.
During march 2020 TOL fell from 45 to 15. As a society we are scarred by the GFC and any time it seems like shit might get rocky everyone gets mega bearish on housing and mega bearish on builders.
i’m mega long all of these shits for this reason, RE bulls are delusional af and loss averse af. THey will refuse to sell for a loss. How is this good for builder ? For one, it ices the home flipper lottery…home flippers are kinda price insensitive in a mania and will bid up contractors, equipment, materials. Look at lumber, price way downies. Contractors are now hungry for work. Etc. margins are expanding for builders. Home flippers are gonna hold the bag for years rather than take the L and move on with life. Not only that, but who is gonna buy from a flipper when they could just buy a brand new home from one of these builder for a 5% discount off median or whatever
Btw BLDR bought back literal 10% of their float in the last fucking quarter and has a forward p/e of like 4
backlogs of a year broadly throughout the market idk literal GFC is already priced in, as long as Jerome doesn’t use his tool too hard i don’t see how i lose money on this
XHB puts.
Little too late for this play.
Could short Cemex ticket CX, Mexican cement manufacturer that supply’s southern US and Latin America. Southern USA makes sense especially because we see large growth in places like Texas and Florida.
Low volume/OI — dumb idea. Directional options plays from noobs are typically the first signpost on a downward trajectory right to the Wendy’s dumpster.
Lumbers going down, people paying cash for Renos. Weigh the options, in the end it’s your CALL
The risk reward..don’t like the idea at all..
It may work but I’m buying puts on garbage companies..
I post daily ideas on what I’m looking at
https://www.kbhome.com/move-in-ready?state=texas
347 move-in ready just in Texas…
Google the other builders they are sitting on inventory like a snorlax
I have shares in TOL, sold CC against them, nice premiums, I also have some puts for insurance. So I am ready. Dividends are icing on the cake.
Another is MTH they have a metric fuck ton of stale inventory that’s been sitting for close to a year. Check it out: https://www.meritagehomes.com/state/az/phoenix/search/qmi/1/ (400 just in Phoenix, AZ)
not the worst idea I’ve heard on this sub…but, not saying much as I once read a post asking how to short Italy. Yes, the country
Even if there’s another housing market downturn, we are still way below the amount of needed housing stock.
Plus, lumber prices are back to normal, which will help builders immensely.
Well it could go up but it could also go down.
You’re late to the game buddy
Why is this nsfw? I am working on trying to get fired and your post is not helpful
I think with lumber prices back down to normal levels people will start to build more. As opposed to buying existing overpriced homes.
I have puts on DHI and LEN. You could also do ITB for ETF put, I may roll some ABNB put profits into that. Builder stock prices have been holding up better than most, they were doing big buybacks. Hopefully that has come to an end.
That PE is based on the greatest market builder have had in years and they are moving into one of the worse.
No!! Do not do this!!! You will bankrupt! I’ll post 3 pictures that a trader/Substack I follow posted last week! I pay $125 a month for this… you’re getting it free because I don’t want you to lose money bro
https://preview.redd.it/3ddqe3n3nz8a1.png?width=1125&format=png&auto=webp&v=enabled&s=9bb1528ca5eab8422c0a714e41183c3e40707614
I have been leading up in puts for XHB. They keep getting cheaper. Hoping that will change
No offense broseph but this play was for 1 year ago today. These stocks already got destroyed.