Betting on the Tallest Midget in Housing (TOL) (KBH) (DHI) (LEN)

Option strategists at Susquehanna noted an option pairs trade in the embattled housing sector.

An opening investor sold ~13,000 KB Home (NYSE: KBH) September 8 (.45d) puts at $0.45 vs. selling 5,400 Toll Brothers (NYSE: TOL) September 20 (.45d) calls at ~$0.72.

According to Susquehanna's strategist, "This investor appears to generally expect September volatility levels in the homebuilders to come in, and directionally is looking for KBH to outperform TOL."

The firm noted that they've seen pair trades in the homebuilder options frequently. For instance, on 7/22, they saw opening investor sell ~16,000 DR Horton Inc. (NYSE: DHI) September 12 calls vs. selling ~12,000 Lennar Corp. (NYSE: LEN) September 18 puts.

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