Bears Circle Popular Homebuilding Stock

Seaport Global upgraded KBH to "buy" from "neutral"

Deputy Editor
Jul 13, 2020 at 12:19 PM
facebook twitter linkedin


The shares of KB Home (NYSE:KBH) are down 0.5% at $30.38 at last check, despite an upgrade from Seaport Global Securities to "buy" from "neutral." The options pits, however, are popping off with much more bearish sentiment. 

More specifically, 2,090 puts have crossed the tape so far today -- two times what's typically seen, compared to 349 calls. Most popular by far is the August 31 put, where new positions are being opened. 

Echoing this, KBH has a 10-day put/call volume ratio of 3.22 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than all but 1% of readings from the past year, suggesting puts are being picked up at a much faster-than-usual rate.  

Also worth noting is KB Home's Schaeffer's Volatility Scorecard (SVS), which sits at a relatively high 91 out of 100. In simpler terms, the stock has tended to exceed option traders' volatility expectations during the past year, a good thing for option buyers.

Pessimism runs deep for analysts as well. Coming into today, four analysts sport a "strong buy" on KBH, while eight are at a "hold" or worse rating. Meanwhile, the 12-month consensus target price of $34.50 is still a 13.7% premium to current levels. 

Looking at KBH's performance on the charts, the equity has found a floor of support at the $28-$29 region, but the 180-day moving average is keeping a cap on any breakout attempts. Year-to-date, the equity is down 11.3%.

KBH July 13

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 

300x250 - Banner 3 - v1