IV is relative to the specific stock. The short answer is "71% is high for KBH". You have to find the "baseline" for the specific stock you're looking at. The easy way to do that is to look at the IV one or two expirations into the future for the atm straddle. In this case it actually doesn't *seem* to be very inflated if you only use that method. But if you dig into historical volatility, you'll see that this is indeed higher than usual. What does that say to me? This expected move isn't purely based off of earnings. This is a pretty unusual situation. Also worth noting is that KBH has monthly expirations and IV inflation around earnings for stocks with monthlies is usually a lot less pronounced.
I like your approach. I'm looking at various short positions in Hovnanian, Beazer, KBH and Taylor Morrison myself. If things really go to shit, then shorting MGIC Corp ($MTG) as a major provider of PMI will have been a play, but unfortunately it's not a super liquid play.
Bear brothers and sisters, hear me and know that the spirit of lord thy CLIFFORD dwells deep inside me. The evil bull empire has struck a great bear market rally blow to us. They strike us down with low volume pumps and algos. But fear not. CLIFFORD is here. He has never left us. Infact ..he is deep within you! Remember when you look at the path you have walked and you see only one set of footprints? That is because CLIFFORD was carrying you through the tough times. Be not afraid of the green candle...for it will once again return to red. KBH 36p/ September. TGT 155p/September
KBH are the first home builders to report earnings if I remember correctly (yeah I’m pulling that from memory 😆). You also have BZH, LGIH, DHI, MHO, LEN, TOL, …. And there are even some other companies loosely affiliated like LL.
Man, did they ever screw that up good. I was going to short their stock. Still might. Has some room to fall yet, I think. Same with KBH LOW HD VNQ and mortgage companies. Housing market looks bad to me and everyone is disagreeing which usually means it's a good time to short. No one agreed stocks were going to tank, no one agreed inflation was going to be insane still, no one agreed the Fed would take a more aggressive policy, no one agreed the yield curve was going to invert, or that we're entering a recession. No one thinks yields are going to drop either. I think they will (traditionally they do in these situations. Inflation is about to whipsaw into a recession. Just a matter of time. I'm holding TLT options. Hopefully, that pans out.
I just keep dumping into the index (VOO). I've done actually pretty ok by buying VOO on dips this year. Every month I consider some individual stocks but I really can't see anything out there right now that is as good a bet. Some stocks that are floating around in my brain, though, are INTC, CWH and DRI or KBH.
I like it. Every time oil gets over $100 a barrel = recession coming. All those people that just got jobs and splurged on these mini mansions, gonna lose their jobs = lose their houses = NO RENOs to be had. I’m on vacation in sunny SW Florida. These houses on the market are going for 3x - 5x what they were purchased for in the past 5 years. Unsustainable rise in prices. NE people are going to eventually have to go back to cold NYC for work and their long vacations will be over soon. PUT ON HD, LOW, KBH, XHB.
Very pleased with AGCO earning report. Like... damn it dragged Deere up. Imagine a <9b market cap pulling a >100b market cap up on earnings. You love to see it. I fully expect it to return all 9% gained and continue careening for the center of the Earth tomorrow, but I don't sell until 165 so ride or die. Hoping this keeps up. Everything did well (even a broken clock right twice a day I suppose): BAC,WFC,QFIN,NAVI,CLF,BOOT,KBH,DHI,STWD a few did drop minimally but SHIT can we just have one more day of bliss before descending back to fuckville?
This kinda reminds me of Jim Cramer pouring beer on Cathie Wood stocks already down 70-80%. And saying it was time to short them. Home builders and Home improvement stocks are already down 10-20%. LEN/DHI/KBH are sub 7 PE ratios. It seems they have already been priced for failure. How much do you think you could squeeze to the downside on stocks that pay dividends and would actually buy back their stock?
In essence the bet he’s making is that the interest rates rising will only be temporary and inflation and supply chain issues will be well in hand by then causing the fed to stop raising rates. This will cause a slowdown in the housing market cause in 2023 there won’t be a FOMO mortgage effect, thereby allowing his calls he sold to probably not have much risk by next year. After all KBH takes a lot to move hard even in one year
Housing related stocks. KBH BLDR Housing market is next to fall. Any of the tech stocks that had a stupid pump last week. People we're just fucking excited to invest in something that wasn't red for a second. Invest in: Credit cards, banks (they do well.in a recession and when rates rise). TREE and UPST are new lending ideas. They have promise. Consumer staples (boring but pretty recession/inflation proof). WMT COST Fast food and alcohol. Scale in with small positions on growth stocks that have actual financial stability and a non-inane p/e. Add to positions as the market falls or stabilizes.
The fed causes overvaluation of assets due to artificially altering the time value of money. Negative yield doesn't happen when the lenders are lending their own money. The fed now owns 24% of all mortgages in the united states. Short XHB, DHI, LEN, KBH
Homebuilders. I'm reading a disconnect here. Mortgage rates were under 3 for last qtr, now over 3.5 & climbing. Lumber is back to $1200 this morning. Real estate prices are up 18% YoY. Homebuyer sentiment lowest since 1981. I'm selling any strength in this sector $XHB $KBH $LEN $DHI $PHM
Some thoughts on playin market in both directions. Bull side- SWBI 2023 20c and POWW 7.5c could be a good bets since I think republicans have an advantage going into Nov midterms and guns/ammo might even outperform during bear market because of fear. Also financials like XLF should do well since rising rates are very possible. Bear side- KBH and other housing sector puts. Interest rates and lumber prices rising. Not good for them. Also puts on RIVN/LCID if you dare. EV puts are risky though because of high IV. You gotta time that shit just right