Options Brief: Traders Pile Into KB Home (KBH)

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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Affiliation: Interactive Brokers

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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1 Comment on Options Brief: Traders Pile Into KB Home (KBH)

  1. KB Home can't wait for this oil spill to wreck the coastline. This way KB Home can buy the toxic land cheap to build on. KB Home just Google "KB Home Sucks". KB will ignore your complaints. The Board of Directors does not care about the quality or the reputation. KB Home only interested in quick profits at your expense and time – with the cheap materials and undocumented workers at this job site. They will undervalue your home just to suit their short term business objective. There is no Lemon Law for your new home in these Gulf States so you’re stuck with it. Years later they will still be in your home trying to fix what should have been done correctly in the first place. The Corporate greed still running high in America – it’s called KB Home. BTW Bruce Karatz the former CEO of KB faces up to 60 years in prison when he gets sentenced September 2010. Ask you salesperson about Bruce and his stock manipulation. The rats are jumping ship from KB Home, Wendy Shiba General Council and secretary stepping down shortly after Ron Burkle's resignation as Board Member.

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