D.R. Horton is slated to release fourth quarter earnings on January 26 and traders expect it to move lower. The options market is pricing in about a 5% move, says Jim Strugger, derivatives strategist at MKM Partners. Historically its moved more than 8%. Competitors Lennar and KB Home already reported and traded down 6% and 17%, respectively. Strugger explains while the homebuilders are under pressure, it is interesting to see D.R. Horton pricing in a lower move relative to historical volatility. Strugger also reviews a protective options strategy investors can employ around a long stock position as the group has been missing on earnings.
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