Stocks quoted in this article:
The 20 stocks listed in the table below are the S&P 400 MidCap Index (MID) components that have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this morning is KB Home (NYSE:KBH), which was heavily targeted by call buyers on Thursday.
Shares of KB Home dropped 3.3% yesterday, pressured by a steep decline in home sales in June. As KBH tumbled, option volume ramped up to 1.76 times the expected level, and 30-day at-the-money implied volatility on the stock jumped 15.9% to close at 28.9%.
The day's most active KBH strike was the August 17 call, where 6,937 contracts were exchanged. Most of these calls changed hands at the ask price, suggesting they were bought, and open interest rose overnight by more than 6,200 contracts. Additionally, data from the International Securities Exchange (ISE) confirms that new bullish bets were added at this strike on Thursday.
By purchasing August 17 calls, options players are betting on KBH to extend its lead above $17 over the next few weeks. The calls were purchased at a volume-weighted average price (VWAP) of $0.91, so breakeven at expiration will be $17.91 (strike price plus VWAP). Shares of KBH are currently down 1.4% at $17.47, so they're about 2.5% away from this breakeven mark.
Yesterday's call buyers could be looking for KB Home (NYSE:KBH) to bounce from support in the $17.50 area, but any rebound could be short-lived. The stock's 80-week moving average, which has capped rally attempts since late March, is currently docked at $18.48.