Schaeffer's Option Activity Alert: Bearish Bets Build a Foundation for KB Home

KB Home (NYSE: KBH) was targeted by pessimistic option players last Friday. During the course of the session, traders on the International Securities Exchange (ISE) bought to open 5,627 puts, compared to just 228 calls. The equity's single-day put/call volume ratio of 24.68 revealed that bearish bets were nearly 25 times more popular than their bullish counterparts.

Friday's activity represented the continuation of a skeptically skewed trend for the homebuilder. KBH has garnered a 10-day ISE put/call volume ratio of 3.01, with investors purchasing pessimistic options at triple the rate of the optimistic alternative. This ratio ranks higher than 80.6% of other such readings taken during the past year, revealing that speculative traders are displaying a greater-than-usual bearish bias.

With traders snapping up put options at a faster pace than usual, KBH's Schaeffer's put/call open interest ratio (SOIR) has climbed steadily. The stock's SOIR touched a 52-week low of 0.72 as recently as March 13, but it arrived today at 1.61, in the 73rd annual percentile. In other words, short-term option players have been more pessimistically aligned just 27% of the time during the past year.

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