Hey trader,
Five thousand contracts crossed in Lennar today in a single block trade.
Sixty percent of that went off at the ask.
The name printed eleven and a half times its average volume.
My first instinct was to skip it. Home builders are not easy to trade.
I generally won’t send out an alert on something with no open interest sitting behind it.
Then I looked at where the stock was actually trading.
Lennar gapped above its put wall at 85. It could not hold the level.
Price is back underneath it now, which puts the stock in a negative gamma region.
Essentially, dealers are positioned in a way that adds fuel to a move lower instead of absorbing it.
That flip is why I’m still on this one. It also handed me an eight-day vertical I can put on for 65 cents.
Below, I’m going to walk you through the structure sitting under that 85 level, because it explains why this print was worth the liquidity headache.
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The Market Was The First Problem
I pulled Lennar up on the Console and clicked into the print. It came back as one block trade, not a series of orders stacking up through the day.
That part was clean. The option chain was not.
Tomorrow’s expiration has a few hundred contracts in it. That is close to nothing.
The at-the-money 85 carries a $0.25 spread. On that ask price, the spread alone is over 20% of what you’re paying.
Basically, you hand back a fifth of the trade just for the privilege of entering and exiting.
Going out to the September 18 expiration improves it a little. The 85 strike shows 2,100 contracts.
The market there is $2.65 by $3.00. That’s $0.35 on a three-dollar option, still over 10%, with only 15 open interest sitting at that strike.
Numbers like that are usually where I stop reading and move to the next name.
The 85 Level Changed Sides
Lennar is up 1.3% on the session. The move looks constructive until you place it against the option structure.
The stock gapped above the 85 put wall. It failed to hold there and dropped back underneath.
A put wall is the strike where dealers carry the heaviest put exposure. While price sits above it, that concentration works like a floor.
Once price loses the level, the same strike becomes resistance overhead.
That drop put us in a negative gamma region. In practical terms, dealers sell into weakness and buy into strength, so a move lower feeds on itself instead of getting absorbed.
The longer-dated chain fills in the rest of the map. October shows 1,100 contracts at 85.
November carries 1,700 contracts at 70, and that’s the put wall out there.
Between here and that strike, there isn’t much standing in the way. The next major level underneath is 70.
The Spread I’m Working
Earnings land on 9/16, two weeks out. I checked whether I have enough room to work with before that date, and I do.
That pushed me to the eight-day expiration. A vertical spread just means I buy one strike and sell a lower one against it, which caps the cost and caps the payout.
Here’s the structure:
- Setup. Buy the 84 put, sell the 82 put, eight days out
- Cost. $0.65, with the natural sitting at $0.95
- Trigger. Price stays beneath 85 and starts peeling away from it
- Target. A move to 82 makes the spread worth at least $1.50, roughly a 100% gain
- Faster exit. If it gets there tomorrow, I sell it for a buck and take $0.35 on 65 cents
- Edge. The skew on this one is pretty nice
There’s a middle outcome worth knowing about. A move to 83 instead of 82 still puts the spread up somewhere around 70% to 80%.
I’ll take that. The whole point of shortening up is getting paid before the move has to go perfectly.
What I Want To See From Here
The condition I’m watching is simple. As long as Lennar stays below 85, the downside gets reinforced.
Pressure builds as price separates from that level. The further it peels away, the more the negative gamma positioning works in the trade’s favor.
One thing could hold me off the $1.50 mark. Volatility may creep higher as earnings approach, and that can keep the spread from pricing where the math says it should.
The print alone was never enough to act on here. A 5,000-contract block in a name with 15 open interest is a curiosity by itself.
The level flip turned it into a trade. That sequence matters more than the size of any single order that shows up on the tape.
Trade Alongside Me In Block Hunter
Everything I walked through here started inside the Console. I loaded the block trades, sorted the day’s biggest prints, and clicked into the one that mattered.
That took a couple of minutes. Learning to read what comes back is the part that takes support.
Block Hunter members get that support directly from me. Most mornings I send out my list of the prints I’m watching before the session gets going.
You also get the library that sits behind the alerts. There’s a four-week gamma mastermind, master classes, and my option guides that I walk through class by class inside Block Hunter classes.
If you’re newer to options, start there. If you already know your way around a chain, come for the daily reads and the flow.
The prints post every day. The difference is whether you can tell which ones are worth your money.
Join me in Block Hunter and start hunting the flow with the Console.
Brandon Chapman, CMT
Creator of Ghost Prints
