Mike Khouw Sees Unusual Options Activity In Lennar And KB Home

On CNBC's "Options Action", Mike Khouw spoke about options activity in KB Home KBH and Lennar Corporation LEN. Both companies are scheduled to report earnings on Wednesday and the options market is implying a 6 percent move in either direction for Lennar, which is higher than 3.5 percent that it typically averages after earnings. The implied move in KB Home is 9 percent and it typically averages 5 percent on the event, explained Khouw.

Both companies also had above average put options volume on Tuesday, said Khouw. Lennar traded around 4 times the average put volume and KB Home traded around double its average put volume. Options traders were buying the January 20 puts in KB Home for $0.60. The trade breaks even at $19.40 or 8.14 percent lower. Khouw noticed some hedging in Lennar as somebody was protecting a long position from a move of 10 percent to the downside.