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Analysts, Options Traders Chime in as KBH Cools Off Post-Earnings

So far, the stock is seeing five times the usual options volume

Deputy Editor
Mar 25, 2021 at 10:46 AM
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The shares of KB Home (NYSE:KBH) are down 3.4% to trade at $41.92 at last check, after the company's fiscal first-quarter report. The homebuilding name announced earnings of $1.02 per share -- higher than analysts' anticipated 92 cents per share -- and lower-than-expected revenue. The stock is also brushing off no fewer than five post-earnings price-target hikes, with the highest from Evercore ISI to $63 from $58. 

On the charts, KBH has been cooling off since its March 17, 13-year high of $47.37, though the $43 level had been acting as support before today's drop. Today's pullback also seems to have been caught by the 60-day moving average. Year-to-date, the equity is still up 25.6%.

Analysts are split on KBH. Of the 11 in coverage, five carry a "strong buy" rating and the remaining six at a tepid "hold." Meanwhile, shorts have been quick to jump ship lately, with short interest down 32.2% during the last two reporting periods. This makes up 3.4% of the stock's available float.

The options pits have been firmly in the bullish camp. This is per KB Home stock's 50-day call/put volume ratio of 3.56 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 98% of readings from the past year. This indicates long calls being picked up at a much faster-than-usual pace during this time. 

Today, the options are being traded at five times what's typically seen at this point. So far, 1,331 calls and 704 puts have crossed the tape, and the most popular is the April 45 call. 

Now could be a good time to weigh in on these options, too. The stock's Schaeffer's Volatility Index (SVI) of 51% stands higher than just 11% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 

 

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