Selling MTH puts for income.
Meritage Homes (MTH) is a homebuilder benefiting from strong demand for new homes.
Higher mortgage rates have become a concern for investors, driving shares of homebuilders lower.
But demand for new homes continues to grow, and prices are soaring. This means homebuilders like MTH will be able to sell homes for higher prices, boosting profit margins.
Ultimately, the benefits of strong demand and profitability should outpace the challenges of higher mortgage rates. And now that homebuilder stocks have pulled back sharply, shares trade for an even more attractive value.
By selling the May $82.50 puts near $4.30, we’re able to collect an annualized yield near 37%, while also giving us roughly $1.80 per share in cushion between the current market price for MTH and our strike price.
- Sell (to open) 1 MTH May 20th $82.50 put
- Limit: $4.30 or more
- The new position will represent roughly 8.3% of our model.
- 10:31 Executed
- Sold 1 MTH May 20th $82.50 Put @ $4.50