Selling MTH puts for income.
Meritage Homes (MTH) builds single family homes and adult communities across the Western, Southern and Southeastern U.S..
Homebuilders have pulled back this year as investors worry that higher interest rates will cut into demand for new homes.
And while higher mortgage rates do make it more difficult for families to afford new homes, there is still a significant imbalance between the number of families who need a home, and the number of available units.
This imbalance should continue to drive profitability for U.S. homebuilders like MTH. Meanwhile, the stocks are trading at steep discounts to previous levels — and at very attractive values compared to profits.
By selling the August $77.50 puts near $3.70, we’re able to collect an annualized yield near 45%, while also giving us roughly $5.00 per share in cushion between the current market price for MTH and our strike price.
- Sell (to open) 1 MTH August 19th $77.50 put
- Limit: $3.70 or more
- The new position will represent roughly 9.1% of our model.
- 13:06 Update – No execution yet.
- We will keep our limit order at $3.70 and wait to see if the trade gets executed.
- 14:20 Executed
- Sold 1 MTH Aug 19th $77.50 Put @ $3.70