$KBH bulls build fast profits

Bullish option traders are racking up profits in KB Home (KBH) this session.

On Jan. 10, Market Rebellion’s Unusual Activity Service found that 10,000 February $42 calls were bought for $1.35 to $1.40 above the existing open interest of 95 contracts with shares at $40.07.

Those calls traded for as much as $8.00 today, more than 5.5 times their initial purchase price. The stock rose 24.28% in the same time frame, underscoring how quickly options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

KBH finished the session at $49.38, up 16.52% on the day.