In at 28.61. TD Ameritrade

DHI BTO MAY 27 CALL
DHI STO MAY 32 CALL
NET DEBIT 2.16

Like this trade, Jim,

Bought MAY 28 calls and sold FEB 30 calls for a -$1.76 debit. Paid for part of it by selling a FEB 28/26 credit put spread for +$0.51. With DHI trading at $28.56 the 28 short strike has a 1.9% cushion. That’s less than my preferred 3%, however, DHI has a strong 80 seasonality into FEB. A $0.51 return on a $2.00 spread meets my 25% preference for short-and-skinny trades.

My plan will be to roll the 30 calls up in February with a goal of returning up to $5.00 on my $1.25 investment. Had to go out to May because April isn’t available, but will probably close early.

Have a great day Jim,

Hi,
We have to bear in mind DHI is in a downtrend overall going back to last July. This is counterbalanced by taking on a position at a low price, with an opportunity to sell at a higher price. I notice someone has just sold 300 shares, but that is a pretty random event. We should consider the Bollinger Bands are in a squeeze; this means there should be increased volatility, but we can only know which way it may move by watching price. Meanwhile RSI is holding its own at 54.8 a good reading.MACD is positive. CMF is just starting to turn positive. Jim is right it has trade up with higher highs and higher lows recently. Here is a link [I hope] http://schrts.co/kMkmHX

DHI is now exhibiting a 2 day combined candle formation called a Harami – a bullish one. Therefore in addition to my options I entered a position in the stock at 28.28. I like that the candle is on the dashed center of the bollinger bands [20 day moving avg] and 50 MA as well a Great Support area!
Also I wanted to pass on from a good source copper is up and this is closely correlated to housing being up.

I decided to close out my calendar spread on DHI as well as sell 200 shares of stock. This netted me a $1049.37 profit in 3 trading days. Like my sister likes to say in life timing is everything. I will likely get back into the stock again.
I have a correction for a post to Roger Dehring on 1/18. I wrote Overtime; what I meant to write was Every time.
And I would be remiss, if I did not thank Roger for the calendar spread idea; as well as Jim Pearce, for a so far successful trade in DHI recommendation. I have had the stock years back, but this has been the most fun with homebuilders for a while.

Good call on DHI Jim, I’m up 96% so far.

Derek

Jim,
I closed out my position today for a 9.13% gain in 7 days which is almost 84% of the targeted return of 10.90% over a projected 3 month holding period. Unless my math is screwy which is certainly possible, that’s equivalent to an annualized return of 416.17%. Is that right??
Thank you Jim, this is my first closed trade with SW and we’re off to a great start!!
Rick

Jim,
I am watching DHI and looking to re-enter at the gap close which should be around the 50 SMA, about $28.50. MACD and RSI should look better as well if it continues to drop to that level. Has anything happened that would change your opinion about the upside here?

Hey BA,

How do the charts look for DHI?

Thanks!

Derek

Hey Derek,
The chart looks strong for DHI. Recently I got ITB since it was spoken of highly by someone I always listen to John Murphy. I just was working on DHI Chart after seeing you had a question, and I wanted to mention there is a positive correlation between ITB and DHI of 0.91%. One difference is there are rentals in ITB as well. I am sending an updated chart for your perusal. http://schrts.co/L72OsN
I wanted to pass on an idea that is new to me I heard in a webinar. lets look in the top viewing pane. I have made an oval highlight to show the dashed thick green line [50 day EMA] passing above the red 200 day Exponential Moving average. This is positive. Here is the new idea [to me] I added the 50 day simple MA represented as gold in color. Note the green dashed line is higher – this is positive. The reason it is different is EMA weights more recent action than simple ma. The reason to show both is just that it confirms RECENTLY DHI has been improving. Please note for those who may not know 50 ought to be above 200 in a healthy stock. If we go down to the MACD pane it is above the 0.0 which is positive. In theory RSI above 70 is overbought, but as I have read often it had to be strong to get there. Lastly and this is a new for me indicator, I have become aware of from yet another webinar the PMO is above the red 0 line positive territory and back in early January it crossed its blue signal line. Now I will mention changes we need to be aware of that Could mean a reversal of fortunes, if MACD dips below 0.0 that can be considered a SELL Signal If RSI gets into the 30-40 area I would not stick around. lastly PMO measures momentum and if the dark line which is the pmo dips below the light signal line that would be a sell signal. here is a free area anyone can use from the source my chart comes from; seasonality we can all easily see what upcoming months it closed higher in, I am challenging anyone who has an interest to check this out and learn some easy to glean facts on when it statisticallyu has been higher. When I got back into ITB about a month ago I discovered it was highest it has been in about a decade. here is the whimsical name for a candle like yesterdays a “Spinning Top”, it shows indecision this may be related to the Presidents speech, and the Fed and what will interest rates do? Wall St always wants to know. If we want to increase jobs homebuilding is a good way to do that, its pretty simple to understand, yesterday I heard we are behind in housing – so we need to get rolling. Last week I bt some July Calls on ITB and looking at my IRA that line is green across my screen. The oldest step-son is in Stowe today in the last division Alpine race forecast is rain 🙁 thats why I watched his race yesterday.
hope you all have some green numbers