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Posts Tagged ‘KBH’

KB Home (KBH) Surges 8%, Yellen on Deck

Wednesday, March 19th, 2014

1:30pm (EST)

With Wall Street getting ready for the upcoming 1Q earnings season in April, current earnings reports have been an afterthought.  Publicly-traded companies have different reporting periods and quarters depending on when their corporations were formed and the offbeat quarters are still worth watching.

Every Sunday night, we list possible earnings trades that we like for the upcoming week.  Some trades are bullish, some bearish, while others are possible straddle and strangle option trades.

Our goal is to find stocks that could move 10%, up or down, to make a 100% return with near-term options.  One trade we were targeting was an option trade for KB Home (KBH, $19.07, up $1.439).

Here were our thoughts in Sunday’s 3/16/14 Weekly Wrap (quotes from 3/14/14):

“KB Home (KBH, $17.51, down $0.17)

April 18 calls (KBH140419C00018000, 0.70, flat)

April 17 puts (KBH140419P00017000, $0.70, up $0.05)

Thoughts:  We have played bullish positions recently in KBH and this will be a big quarter for the company.  They could say the weather played a major role in a miss or they could say nothing and business is good.” (END)

The knuckleheads on Wall Street have been downgrading the stock in recent weeks but we have said KB Home was one of our favorite stocks in the Housing sector.

The company reported a profit of $0.12 a share on revenue of $450.7 million versus estimates for $0.08 a share on sales of $435.3 million.  KB Home also ended the quarter with a higher number of homes in backlog and with a higher average selling price.

We listed put options in case the suit-and-ties knew something we didn’t due to the downgrades but business was great and they were way off on their numbers.

We should have listened to our gut as the April 18 calls (KBH140419C00018000, $1.40, up $0.70) are up 100% and gave traded to a high of $1.67.

The April 17 puts (KBH140419P00017000, $0.15, down $0.40) are folding like a cheap lawn chair as they are down over 70%.

The beauty of a strangle option trades is that if a stock does move roughly 10% or more, the right near-term call and put options should offset each other enough to make a decent double-digit profit.

Both options could have been purchased on Monday’s open for 70 cents apiece and the premiums would have total $1.40.

With the calls at $1.40 and the puts still at a 15 cents, the premium adds up to $1.64 and would represent an 11% return if both sides of the trades were closed at current levels.

We didn’t take this trade for our Daily but we wanted to show how these types of option strategies work because we do recommend them from time to time in our Weekly Wrap.

Our Daily newsletter aims at making triple-digit profits for all of our trades and the Weekly Wrap strides for monthly double-digit returns.

We have been busy with our current trades and while we may miss a few here and there, we should have stuck to our guns and issued this trade for our Weekly Wrap.  We probably should have gone straight-up with the call options for our Daily.

We can’t complain though as we have some nice pin action going with our current trades.

As we make the turn, the Dow is higher by 2 points to 16,338 while the S&P 500 is gaining 1 point to 1,873.  The Nasdaq is down 3 points to 4,330 and the Russell 2K is down 2 to 1,203.

Subscribers, hit the Members for the current updates!


Cree Takes a Hit, Financial Stocks Up

Wednesday, March 23rd, 2011

1:35pm (EST) 

The market continues to trade in narrow range as it did all day yesterday.  The bears pushed the indexes lower at the start but the bulls have turned the tables and have the lead as we head towards the second half of trading.  

The bears failed to take advantage of a weak housing report as new home sales for February fell to 250,000 versus expectations for 288,000.  Despite the poor results, Homebuilding stocks like Pulte Group (PHM, $7.34, up $0.20), Lennar (LEN, $19.52, down $0.01), and KB Home (KBH, $13.23, flat) have held up well.

The Dow traded to a low of 11,972 but has reclaimed 12,000 as it is up 25 points to 12,043.  The S&P 500 is up down a point to 1,292 while the Nasdaq is up 3 points to 2,688.

We aren’t surprised to see a pause in the action as there are very few catalysts at the moment for the bulls to feed off of.  The next “big’ event that could get the market out of its current trading range will be first quarter earnings which start in April.  However, we like the flat action and we still think the bulls can push upper resistance from mid-February until earnings season.  From there, let the fireworks begin. 

Tech is still looking weak so we will need the Financial stocks to lead the next leg higher.  Cree (CREE, $43.18, down $5.81) came out this morning and cut its guidance for the upcoming quarter sending shares down 12%.

Discover Financial Services (DFS, $23.27, up $1.02) is up nearly 5% after beating Wall Street’s estimates and raising its dividend.  The company reported a profit of $465 million, or $0.84 a share, versus a loss of $104 million, or $0.22 a share, in the year ago period.  Revenue came in at $1.73 billion, up from $1.69 billion a year earlier.

Analysts were expecting 60 cents a share on revenue of $1.64 billion. 

We think some of the Financial stocks look really cheap but we still don’t trust them, yet.  We have been watching the near-term April options for a couple of trades but we may move out to June or July to give this sector enough time to rebound.  However, we may still take a shot with an April or May call option if there is a quick bounce over the next few weeks.

Market Flat Heading Into Second Half

Thursday, September 23rd, 2010

1:05pm (EST)

The bears looked poised to take the market back to support levels as futures were pointing towards a lower open this morning.  Things got worse when the unemployment numbers came out as futures worsened and the market opened with pretty steep losses.  However, a “rosy” housing report lifted the bulls’ spirits as they have battled back to bring the market near even.

The latest jobless claims data showed Initial Jobless Claims for last week totaled 465,000, which was down 12,000 week-over-week but more than the 450,000 claims that had been expected.  Continuing claims totaled 4.5 million, which was down 48,000.

The rebound came after the National Association of Realtors said sales of previously occupied homes rose 7.6% last month to a seasonally adjusted annual rate of 4.13 million in August from an upwardly revised 3.84 million in July.  The market turned on a dime off its lows but the real news that the talking heads are overlooking is the fact they remain nearly 20% below the 5.10 million-unit pace from August 2009.  The bulls took the rebound as good news but volume is still weak and August was nasty as it was still the second-worst month for sales in more than 10 years.

As a result, the Dow is currently down a point to 10,738 while the S&P is also down a point to 1,133.  The Dow has touched a low of 10,645 while the S&P 500 has traded down to 1,125.  The Nasdaq is bucking the trend as it is up 14 points to 2,349 and is right at our 2,350 top once again.

We have a lot to cover in our Members Area as we were able to get into two new aggressive trades this morning and we want to cover our other positions as well.  KB Home (KBH, $11.97, down $0.02) will be reporting tomorrow before the bell so we will talk about their earnings in the morning but in the meantime, be careful if you are chasing this market.  We still need to see more volume on a breakout to the upside as the bulls struggle with resistance.   

Tuesday’s Tidbits

Tuesday, August 25th, 2009

1:00pm (EST)

The market has hit 10-month highs as the Dow is currently up 80 points to 9,589.  The Nasdaq is showing a gain of 15 points and stands at 2,033 while the S&P 500 has jumped 8 and is 1,034.

I mentioned in the Weekly Wrap that economic news would take on more meaning this week as earnings wound down and today’s rally can be attributed to the consumer confidence data and the housing figures.  Home prices rose for the 2nd consecutive month and when you throw in the Bernanke bonus it’s easy to see why the bulls have taken this market higher.

Homebuilding stocks (add to you Watch List) are getting a pop as Pulte Homes (PHM, $13.12, up $0.51), Lennar (LEN, $15.27, up $0.70) and KB Home (KBH, $18.15, up $0.65) are up 4%-5%.  Lennar was a huge winner on the short side a few years ago.  Here were my thoughts two years ago:

Lennar on 07/10/07:

“With the housing market showing no signs of recovery any time soon it may be time to take a look at some of the stocks in the sector that could be headed lower. While we may have arrived to the party late, I certainly don’t think the party’s over as the whole group could see continued new lows. Although it’s hard to predict where the bottom is for some of these stocks, I believe they could still see another 15% to 20% drop. As such, if my forecast is right, Lennar ($34.86, down $1.45) could be headed below $30.”

A note on Watch Lists.  This is how you find trades and this is how you keep track of sectors.  We have had a lot of new subscribers this week and I often talk about keeping Watch Lists as a way to keep track of sectors and possible trades.  Look, when one sector gets hot, another gets cold.  Money moves in, money moves out.  It’s an endless game we play and we can go long or short.  That is the beauty of it all, folks.  It makes what we do the coolest job in the world.

Speaking of which, have you seen the action in Fannie Mae (FNM, $1.88, up $0.18) and Freddie Mac (FRE, $2.14, up $0.09)?  Up 20%-30% yesterday on huge volume.  These two stocks were also a favorite punching bag of mine on the way down.  In fact, if you research this blog from July 2007 you will see where I profiled trades that returned 140%, 150% and even 216%.

I wanted to point some of these things out because the trading manual I have been working on is nearly complete.  We are also entering a “trader’s market” and I am almost 100% certain the volatility is going to pick-up even more so.  You have seen us take quick gains and it is okay to take a 100% return on half your profits and close the rest when they hit their stops.

You have to remember…there is always a trade and we are all about making money.  However, a lot of beginning investors will lose their profits because they don’t have a feel for the market or they think a losing position will come back.  On the flip side of that, some investors get a 100% return only to have visions of making 200% or 500% in a week.  In the meantime, they start to lose that 100% profit and end up taking a loss on the trade.  I’ve seen it time and time again.  So watch your stops and take profits a little early if you see something you don’t like.

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    The portfolios can be found in the Members Area as well as past portfolios from 2008-2011. Overall, we are 621-273 on nearly 900 real-time recommendations that equals a success rate of 70%. This means, on average, 7-out-of-10 of our option trade recommendations make you money and we hope to have an even better success rate for 2013.

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Trader Comments:
    I just want you to know that I love the way you write and explain everything. I am new to this, and have lost 50% of my account until I met you guys. Iit is slowly coming back. I will be calling to set up a year of membership rather than the one quarter. Thanks again, and LOVE YOU ALL. REGINA L.

    Rick, I appreciate the advice. I think I will just sit back and utilize your selections only for awhile. This will obviously save me a great deal of money in commissions. I have gone thru your entire site including the video on money management. This has brought me to the stark realization that I have been trading too much for too little. I definitely have not been "swinging for the fences", but I also think I have been getting impatient with trades and getting out too fast. This has no doubt caused me too trade too much. I like, and definitely agree on, the advice on money management. Thanks for the help. STEVE T.

    Thank you!!! I held on to the NFLX position since Nov. 13 at a cost of $1.89. Sold ½ on April 14th for a 540% return and the other ½ upon earnings for 702% return. Total profit of $11,615 a 621% return. Keep the recommendations coming and thanks to you and your team for the service you provide. SCOTT H.

    Rick & Team, GREAT Call on NKE for my two trading accounts:
    1) Entry at .65, out at 1.45, 1.55 Profit = $415
    2) Entry at .60, out at 1.75, 1.50 Profit = $485 PETER G.

    Hey Rick! Here is an update on what your picks have done in my accounts.

    1) Great call on the JoyG March 55. I bought when you said, then bought again on one of the dips. Booked 80+% profit. Made enough to pay for your service for years to come.

    2) Also booked profits on your Berk Feb 74 (80%) and threw a major chunk of change at the March 75’s (190+%). I would have never known that Buffet's stock had split if it weren’t for your service. Bought the shares also for the long haul. Won’t look at them for another 20 years. Great job on getting us in before the indexes did.

    3) Took profit on your Imax March 12.5. 20 cent trailing stop at 1.90 yesterday. Not sure what the profit on that was, but profit is profit.

    I see that you took a loss on some of these. It’s all good. I look to trade your “ideas” not your exact calls. I THANK YOU! For your ideas and commentary. Keep up the good work. And keep those ideas coming. LAWRENCE O.

    Loving this subscription so far! I got into the BRK feb 76 calls the day you talked about right before the up over 300% (0.70 to 2.475)! Keep the good picks coming and let's see some OSIS and EMC upside soon! Just wanted to share my positive enthusiasm on your gives us individual investors great ideas on not only the options market, but also the broader equity market! Case in point is BRK...I can't always read the breaking business news but its easy to read your twice daily updates on my smartphone...helped me get some BRK shares immediately after the split which I will hold for the long haul! Thanks again! C.J.

    Aloha Rick - Thank you so much for the great CL pick. I am not sure if there was buy-out/merger news or what but at 3PM today Colgate-Palmolive absolutely EXPLODED to the upside, and my calls turned into green candy when they went from 1.40 to 3.8 in a matter of seconds! I even sold a few for over 4.0! Much thanks and keep the solid picks up my friend, honestly. Only a fool would scoff at 267% gains... Peace! SHAUN

    I like the fact that you ask for comments from subscribers. Good customer service. By the way, am enjoying the service so far. Some good profitable calls. Keep up the good work. MICHAEL K.

    Woo hoo! Out for 50% on WMT this am. Making up for my depression for getting out of pcln for a 30% gain monday :( you the man! any word on the manual? My friend Mike ( who I sent to your service) told me he emailed you about your integrity in reporting fills. I echo that sentiment big time.. keep it up! Cheers!
    PARAG P.

    Hi Rick, as a new member all I can say is, 'show off' LOL, with PCLN. JAY P.

    Rick, I am a new subscriber to your service, and I want to say I am impressed. I am impressed by your results, but more than that I am impressed by your reporting of your fills. You could have easily said you got that Wal-Mart call today for 80 cents, instead you reported 98 cents! Good job and keep it up, I watched the reporting of the fills first, and then I subscribed. Thank You. MIKE

    Hi, good morning. I jumped the gun a little on this one (PCLN). But still made $1,675.00 profit!! Very happy!! Keep up the good work!! Thanks. TRISH D.

    Hi there, I have joined recently, and I am very happy to tell you that I am up over $10,000 on your picks in a month. I started on 10/7 with the Intel pick. I'll be your member for life. Please don't quit on us. Also, I am learning a lot about options. I didn’t get in your recent APOL and that gold trade and only had one loss on CHK. I appreciate all the DD you do. I enjoy your market commentaries. Best advice site period, and I have tried a few here and there. Again, you guys rock! MIN L.

    Thanks be to Momentum Options Trading for providing me with some fantastic wins. I just started with this service and am up nearly 50% in less than a month. There have been losses, but if I manage them properly, I will continue the best efforts given on the blog (in which there are no complaints). What a great cause for humanity. I feel more confident about my trades and continue to play the wins. Best of all, I am now keeping my regular paychecks in the bank! Thank you! JOE G.

    Rick - I wanted to say thanks for getting me started on the right foot with your service. I have made six trades since starting on October 22, 2009. Five are winners and One loser netting me $6,245. Thanks again and keep the trade recommendations coming. GREG F.

    I got into the Nike 60 Call at 1.85, sold at 5.00, also bought a 55 put at 1.05, but got stopped out at .35. What a ride! $2830.00 in the black even with the put. It's right at 100% return. I hope earnings season coming up is going to look like this trade. NOEL

    Nice call on Nike. I think I'll go buy a pair with my profits! : ) I did the straddle for safety but still made 62% on the trade. Not bad for less than 24 hours. If Goldman is right, then the Nov 70s or 75's could be a steal today. TODD F.

    What a sweet way to get introduced to Momentum. My first trade based on your picks and it a 2X. Thank you! PAUL H.

    “Limit order was set at 1.60 on RIMM so it sold. I may have left some money on the table but you can't go broke making a profit. That was a fun trade. Thank you. Good call. I’ve been watching and trading Rick's advice since March. It’s usually a fun ride, but I give him heck when it's wrong to. :) ” NOEL

    “Your service rocks! I made bank on Dendreon last week! The other thing I have to say is that it took me quite a while to find a REAL options trading service like yours. Most of what’s out there is 99% scam and very sketchy. Momentum Options Trading is the first service I found that I can trust and seriously make money with.” CHRISTIAN

    “I made $420.00 on ANF in 2 days. Thanks for the trade and updates on getting out of the trade.” JOHN

    “I did follow a lot of your trades with 1-2 contracts per trade and YTD I’m up 108%. I try not to follow blindly by not entering all of your trades and sometimes entering the ones you don’t. I entered AIG a few weeks ago against recommendation – that one hurt.” CHARLES M.

    “I have been following you for several months and am interested in the new service. I hate to see the free service go away but as they say, “all good things must come to an end”. My ability to join will be greatly influenced by the monthly fee so I’m very curious to see the new prices. Thanks for making April a great month for me and my family.” BRYAN C.

    “I have really enjoyed the past month since finding your blog. You have made some great calls. I would appreciate info. on the new options mentoring program. Thanks.” JOHN H.

    “Hi Rick, I have been following your blog for several months now and I would like to be including on the list for your new service and to receive more information about it. And yes I was a Dendreon winner with your tips. Turned $280 into $7700, and literally saved my butt.” JEFFREY

    “I made over 6k on your Dendreon trade, and I’m very interested in learning how you pick and trade options. Sign me up.” ED

    “Rick – Wow what a day! I got in at the Dendreon calls at $2.25. Thanks to for your advice. I appreciate that. This company has a lock on this type of therapy and no one else in the world is close. Kind of reminds me of the type of companies that Peter Lynch and Warren Buffet suggest that investments be made in. Companies that can build a moat around their business model, that allows them to charge a premium for their product or service. In other words - a monopoly.” GREG

    “Hi Rick, Thank you so much for the Dendreon trade, I made almost $10,000 with that trade with a little over $2,000 investment. You have shown me the power of options trading. Again, thank you so much for all your inputs.” KEN

    “Hi Rick, thanks for the encouragement to play the dendreon calls! did freaking great! Got in the first lot at $1.44 on 3-24-09, sold at $2.45, 70% not bad. Bought it back at $2.30 on 4-7-09 closed out on 4-14-09 for 454% gain! Wow! I love it when that happens. So, thanks the encouragement to get back in when others were saying sell, sell, sell. Keep up the good work.” GARETT

    “Rick – Thanks for Dendreon – it has made all the headlines today! I missed on RIMM earlier, but I’ve been holding onto DNDN calls since 3rd week March. Of course today it all paid off today, as DNDN rocketed up.” TERENCE

    Jan. 31 2012
    Rick, new member...Studied all current trades, did some chart work,picked ZNGA, PEP, MGM...Sold on Feb. 2 for $3600.00 profit...Cost for 1-year membership to your newsletter was less than $1000.00..All I have to say..Thank you. John H –

    Rick, I purchased 10 contracts of the Nike March 85 puts Thursday afternoon for $2.00. Thing is, I was upset because the puts went down to $1.60 or so before the market closed. Well, needless to say Nike didn’t impress Wall Street and when I turned on the computer this morning the puts were worth $7.10! Sold them for a $5,100 profit!. Thanks again, you are the MAN. Chuck J-

    Hi Rick,

    I will start off with a thank you for your time and dedication to all
    the research you and your team commit yourself to. This is not me just being excited about the profits I have accumulated aka (bank) ! You have helped me get back to the passion I had of researching stocks/options. Keith N-

    Hi Rick,

    I want to share my great results on GMCR. Based on your comments on February 15th, I bought 20 options at $0.28. They closed today at $7.00, which is a 2,300% gain. My $560 dollars turned into $14,000 in less than a month. In decades of trading, this is my single best trade ever. Thank you! By the way, the Dow was down 228 points today and I could care less. What a great trade. It proves the amazing power of options. I am so grateful for your service, which calls it straight all the time, your options trading manual, and most of all, your amazing skill
    at finding winning trades. I have attached a copy of the trade from
    my brokerage screen.

    Hi Rick,

    Wow!! my account it up 70% since i joined last month and market is going the opposite direction. Really appreciate your service. I just wanted to drop a note to say THANK YOU. Hope to be with you guys for a very long time. Mel


    Great call on Fosl I bought the may 120 puts for 3.70 yesterday morning just sold for $32.00 today
    Keep up the great work
    Thank you, Henri

    Rick –

    I bought 10 Deckers Outdoor (DECK) May 55 puts at $0.50 on 4/26/12 and sold them on 4/27/12 for $1.65. I made $1150 in one day. Thanks. I knew something good would happen sooner or later.
    HOW THE HECK did you know Green Mountain Coffee (GMCR) was going to go down 20 points???!!!! I bought 10 of the May 35 puts at $0.49 and then 5 more at .30. I sold them at 5.80. Thank you again.
    You have made a believer out of me. Alan

    Rick –
    I have only been a member for about 6 weeks but I have done well on most of the trades. My first two were QQQ and SPY a month ago and since then I've gotten into the groove and been doing well.
    I try to execute the trades that you recommend as soon as you send them out, sometimes I can't and I miss the Entry price. However, sometimes when I miss the Entry, the price goes down and I get a better price.
    That's exactly what happened with GMCR.
    You recommended it at around $.81 I think, but by the time I got to it, the price was $.27. I bought 100 Puts on Wednesday May 2, 2012 and sold half of them 24 hours later at $5.95 for a nice 2,203% gain. As per your recommendation, as GMCR went above $30 I sold the remaining 50 Puts at $5.50 for a slightly less 2,037% gain.
    On average that one trade netted me a 2,120% gain, entirely based on YOUR recommendation (and a little bit of luck). To put this in real terms, I risked $2,700 on Wednesday and pocketed $54,550 just 24 hours later.
    So uhh, let's do that again real soon!!
    Feel free to use my name. The tax guys have me on speed-dial already anyway. Dennis

    That was awesome on your GMCR pick, I know how risky it can been holding into earnings but you pulled it off. 
    I just started my autotrading with you today and am in on your QQQ play. I look forward this service. 
    I have a busy career and I have tried to follow and trade throughout the day and found it too hard. I hope you continue to have a great year, I plan to go along for the ride. I am starting slow but will pile more in once I have secured some profits. 
    Keep up the good work your trading has been spot on. I am sure you paid your dues to get this point in your career. Anthony


    Great call on GMCR!  I have been trading for about 15 years actively.  This may be the best trade I ever made.  Got in on Monday, April 30 and the stock was up from when you recommended it.  It went up further after I got in.  Here are the facts:
    Monday, April 30th: Bought 15 June 37's at $1.25= $1900 approx
    Thursday, May 3rd: Sold 15 June 37's at $9.30=$13,950
    Gain for the week: $12,050.
    I understand you will not get them all right.  It’s important to ride those winners and as you could tell from my selling price, I sold when the stock went to $28.10, so left a little on the table.  Who can complain.
    Keep the suggestions coming, looking for another jump on your FSLR, one that I have been riding very hard.
    Best regards, Bob

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