KBH – KB Home – Investors are piling into call options on the homebuilding firm this morning with shares of the underlying stock rallying more than 3.65% to $10.77 by 10:55 am (ET). Bullish options traders expecting continued appreciation in the price of KBH’s shares coveted approximately 9,500 calls at the August $12 strike for an average premium of $0.32 per contract. Call buyers make money if, by August expiration day, the homebuilders’ shares jump 14.4% over the current price of $10.77 to surpass the average breakeven point to the upside at $12.32. Frenzied activity in August $12 strike call options sticks out like sore thumb as previously existing call open interest at that strike stands at a meager 729 contracts. As of 11:00 am (ET), it looks like more than 16,800 call options have changed hands at the August $12 strike price.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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