KBH is flashing a historically bullish signal on the charts
KB Home (NYSE:KBH) stock is up 1.3% at $77.08 today, pacing for its fourth-straight daily gain and nearing last session’s 18-year high of $78.19. This peal follows a sharp rally, with the homebuilding stock adding 15.5% last week — its highest weekly percentage gain since November.
An unwinding of pessimism amongst options traders could provide continued support. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), KB Home stock’s 50-day put/call volume ratio of 1.48 ranks higher than 81% of readings from the past year, meaning puts have been picked up at a much faster-than-usual rate of late.
Furthermore, the stock’s highs come amid historically low implied volatility (IV), as its Schaeffer’s Volatility Index (SVI) of 31% tanks in the 11th percentile of its annual range. Per Schaeffer’s Senior Quantitative Analyst Rocky White, KBH saw seven signals in the past five years when it was trading within 2% of its 52-week high, while its SVI sat in the 20th percentile of its annual range or lower, as is now the case. The security was higher one month later after 43.7% of these signals, averaging a 3.1% gain.
It’s also worth noting that short interest represents 8.8% of the stock’s available float. It would take shorts more than four days to buy back their bearish bets, at KBH’s average pace of trading.