Homebuilder stocks fall from record highs after earnings report

Last week, KBH reached a record high

KB Home (NYSE:KBH) reported fiscal third-quarter results after the close yesterday, with earnings of $2.04 per share missing estimates by two cents, while revenue of $1.75 billion was slightly above expectations. In addition, the builder’s full-year real estate revenue forecast and gross operating margin expectations disappointed. This comes against the backdrop of a decline in new home sales, according to U.S. data released this morning.

At last glance, KBH was down 4.3% to $83.70, a further decline from its last trading close on September 19. record high of USD 89.70. Since the beginning of the year, equity has increased by 34%.

Options traders are getting in on the action after the event. So far, there have been 2,372 calls and 3,038 puts on the tape, which is six times more than the total options volume that is typically seen at this point. The most popular call is the October 80 put, followed by the October 85 put from the same series.

Some short covering could give KBH a boost in the near term, though, as short interest accounts for 10.6% of the stock’s available float. It would take shorts almost five days to buy back their bearish bets, at the stock’s average trading pace.