KB Home (KBH) is a homebuilder in the U.S. constructing and selling homes in markets across the country. The company’s stock is currently trading around $18.45 in a 52 week range of $15.48-$25.14. The stock has been relatively sideways this year with shares rallying around 1% year to date. KBH reported better than expected earnings earlier this week and in today’s trading session we are seeing some bullish options activity in the name. Earlier in the session a trader bought 2,214 KBH Mar 18.5 calls for $0.12. This is actually a rather aggressive trade as these calls will expire tomorrow. This trader is hoping for a pop in KBH by tomorrow’s expiration. These calls were continually bought after the first order hit the tape and now more than 11,000 contracts have traded on that line against open interest of only 1,016. While this may look like a “lottery ticket” trade volume like this the day before expiration is worth paying attention to. We bought these same calls for $0.15.
Trade: Buying the KBH Mar 18.5 Calls for $0.15
Risk: $15 per 1 lot
Reward: Unlimited
Breakeven: $18.65