Options Traders Wager on KB Home with Housing Sector in Focus

KBH has been showing strength in recent weeks

Josh Selway
Mar 25, 2019 at 3:26 PM
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KB Home (NYSE:KBH) is preparing to report earnings after the close tomorrow, March 26, and the options market is foreseeing greater-than-normal volatility following the event. By the numbers, the stock has averaged a 4.1% swing after earnings during the past eight quarters, but this time around speculators are pricing in an 8.3% move for Wednesday's trading. Meanwhile, the equity has moved higher after the last two earnings releases that occurred in March.

After a rough 2018, the shares have been showing strength in recent weeks, rising atop support from the 50-day moving average, and today extending a lead atop the 200-day, as well. At last check, KBH stock was trading up 4.8% at $23.85, possibly still riding the tailwinds of a surprisingly strong existing homes report for February. This comes as the current week's economic schedule features a number of updates on the housing sector.

Meanwhile, options trading volumes are high today, with calls crossing at almost three times the daily average, and more than doubling the number of puts traded. The most popular option is the April 24 call, but there was already high open interest there coming into today, and there's not clear evidence of new positions being opened. One contract where traders actually are initiating positions is the May 25 call, and those buying the option would be expecting the shares to pass the $25 mark in the coming weeks.

kbh stock chart


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