Traders Bet On More Pain Ahead For Homebuilders

Homebuilder stocks declined for the fifth consecutive day on Thursday, with U.S. mortgage rates spiking to 5.78%, the highest since 1987.

On CNBC's "Options Action," Michael Khouw of Optimize Advisors said the SPDR S&P Homebuilders ETF XHB traded 5 times its average daily put volume on Thursday.

Check out homebuilder stocks making big moves in the premarket.

There was a buyer of 4,000 of the July 50/45 at $1.15 per contract on average, Khouw mentioned. The trader sees SPDR S&P Homebuilders ETF declining by at least 14% by July expiration, he added.

XHB Price Action: SPDR S&P Homebuilders ETF declined nearly 7% on Thursday and has lost over 38% year-to-date.