Mike Khouw Sees Unusual Activity In KB Home

On CNBC's "Options Action", Mike Khouw spoke about unusually high options acitivity in KB Home KBH ahead of earnings.

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The company is going to report earnings on Wednesday after the market closes and the stock typically moves 6% on the event. The call volume on Tuesday was more than double the average daily call volume and the most active were the Oct. $32 calls. They were trading for $1.15, which sets the breakeven for the trade at $33.15 or 5.44% above the closing price on Tuesday.