SPDR S&P Homebuilders ETF Options Strategy

XHB is an exchange traded fund loaded with home builders and such housing related companies as Lowes (LOW) and Home Depot (HD).<!--more--> I believe that the home builders have generally seen their lows for the next year or so, even though a few builders may be vulnerable to bankruptcy. This makes the diversified ETF a safer vehicle.

Using XHB as our ETF proxy for homebuilders, the index bottomed out early this year at 15.22. XHB now trades around $23. With market interest rates very low investors are looking for relatively safe returns on their investments that exceed 2 or 3 %. I like the idea of selling out of the money cash secured puts on XHB struck below the low of $ 15.