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Today, we’re opening a new bullish trade on USG Corporation (NYSE:USG). We are stepping into this trade following the surprising housing data and Toll Brothers (NYSE:TOL)’s earnings last week. The signs are getting much stronger that the housing sector is running out of inventory, and there appears to be an emerging materials/labor shortage.
Homebuilders can be a little tricky right now, so we favor a building-material supplier like USG for a bullish position. The company makes sheetrock and other goods used in residential and commercial construction. Existing home inventories are scarce, and this will put pressure on suppliers and builders, which should support our outlook.
The stock has been a little choppy recently as a result of last week’s Fed minutes, uncertainty in the oil sector and from Europe. This back-and-forth has become pretty typical over the last month, so we are looking at this as a good opportunity to buy a small dip after support has been confirmed.
Use a limit order to ‘buy to open’ the USG April 34 Calls (USG170421C00034000) for a maximum price of $1.35.
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