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 today is KB Home (NYSE:KBH), which has seen noteworthy activity at the September 17 strike.
Diving right in, KB Home call volume nearly doubles the expected intraday amount, and outweighs put volume by more than 17 times. Of the nearly 5,500 calls on the tape, roughly 90% have traded at the September 17 strike. With 58% of the contracts trading at the bid price, and volume outstripping open interest here, it appears the out-of-the-money calls are being sold to open. This is partially confirmed by data from the International Securities Exchange (ISE), which indicates 2,171 contracts were sold to open at the customer level.
The September 17 calls traded at a volume-weighted average price (VWAP) of $0.44 per contract, which call writers will retain as their maximum potential reward, as long as KBH remains at or below the strike through September options expiration. However, if the housing stock topples $17 between now and then, the sellers risk assignment, and potentially unlimited losses.
On the charts this afternoon, KB Home (NYSE:KBH) has added nearly 2% to trade at $16.45. However, the shares appear to be running into double-barreled resistance at their 10-day moving average (currently located at $16.47) and the overhead $16.50 mark.