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%.