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I'm not an expert in options strategy an I don't use them much except to stop the bleeding at times if I want to stay in a losing position to offset my loses or to leverage more shares for a cheaper price. You're late in doing this to start with but I'll give you my strategy from when the stock had fallen from your entry of around 82. When you entered the position your expectations were long and you never thought that it was going to drop much less drop to what it closed at today. I'm not going to lecture you and this is not meant to be that. First you should have set a stop and that stop should have calculated what risk you were open to and how much you could afford to lose on the trade. If it hit the stop your out and that's that and you move on taking the minimum loss you could afford. But on occassion for whatever reasons you go past what should have been your exit and now what should you do. You either exit and eat the loss or if you think there is some chance the stock will rebound in the next day or few days but you're not quite sure you can take out an insurance policy by buying some puts on the stock.
This is a capture of todays call and put option chain for KBH. I can't use the numbers that would have suited you when the stock was 77/78 range because we're way past that now so the example will have to be done with the numbers that are for today but the logic behind the manuever is the same just different numbers.
You want to buy an out of the money put that is going to be moving towards being in the money if the stock continues to drop farther down. The farther out of the money and (out of the money meaning anything on the option chain which is a lower price than what the stock is selling for or closed at today) and the time element is also an important factor (how far out the expiration date of the option is; Sept/Oct/Jan etc.) because both of these will be a determining factor in the price of the option. So if you look at the option chain you'll see that Sept 05 is in black and that is the expiration date we are using in this example and what time frame all the strike prices are based on in our example.
So if you had, for this example only, entered at $ 74/75 range and it dropped to 72.45 and you wanted some insurance against it going lower you would buy some Sept 05 65 strike price puts for $1.10 per share or $110 per 100 share contract and if the stock continues to go drop lower the puts would increase proportionally in value as the stock dropped.
If you had 100 share of the stock at $74 = $7400 invested.
If you bought 5 contracts for $110 per 100 share contract = $550.00
Total invested = $7400.00 for the stock
550.00 for the options
Total invested = $7950.00
If the stock goes down to $70.00 you're out $400.00. 100 shares - $4.00 per share =$400.00. But the options will have increased in value as the stock declined in value to say $2.50 per share or $250.00 per contract x 5 contracts = $1250.00 - $550.00 original cost of the 5 option contracts = $750.00 gain on the options contracts. You now have recouped the original $400.00 loss on the stock trade and made a profit of $350.00 overall on the whole shabang.
That is how it works in theory as an example. I'm not sure how much the options would increase in value, I used $2.50 from $1.10 as the stock dropped to the $70.00 range but it could be less but regardless the play would have been insurance and you certainly would have at least guaranteed that you would have broken even or made a few sheckles and not lost money. I simplified it for you but that is one way to do it.
The most opportune time to do it would have been when the stock was at $77/78 range and bought the Sept 05 $70 put. The you would have most likely made money. If the stock goes back up you basically get back to even as the option expires worthless or somewhat less than what you bought it for but you recoup the losses from the stock dropping if it goes back up.
Always have a plan and assess your risk. How much you can afford to lose and set a stop and honor it. You cannot call yourself a trader or give anyone else advice if you cannot do that for yourself. From a friend.
This is a capture of todays call and put option chain for KBH. I can't use the numbers that would have suited you when the stock was 77/78 range because we're way past that now so the example will have to be done with the numbers that are for today but the logic behind the manuever is the same just different numbers.
You want to buy an out of the money put that is going to be moving towards being in the money if the stock continues to drop farther down. The farther out of the money and (out of the money meaning anything on the option chain which is a lower price than what the stock is selling for or closed at today) and the time element is also an important factor (how far out the expiration date of the option is; Sept/Oct/Jan etc.) because both of these will be a determining factor in the price of the option. So if you look at the option chain you'll see that Sept 05 is in black and that is the expiration date we are using in this example and what time frame all the strike prices are based on in our example.
So if you had, for this example only, entered at $ 74/75 range and it dropped to 72.45 and you wanted some insurance against it going lower you would buy some Sept 05 65 strike price puts for $1.10 per share or $110 per 100 share contract and if the stock continues to go drop lower the puts would increase proportionally in value as the stock dropped.
If you had 100 share of the stock at $74 = $7400 invested.
If you bought 5 contracts for $110 per 100 share contract = $550.00
Total invested = $7400.00 for the stock
550.00 for the options
Total invested = $7950.00
If the stock goes down to $70.00 you're out $400.00. 100 shares - $4.00 per share =$400.00. But the options will have increased in value as the stock declined in value to say $2.50 per share or $250.00 per contract x 5 contracts = $1250.00 - $550.00 original cost of the 5 option contracts = $750.00 gain on the options contracts. You now have recouped the original $400.00 loss on the stock trade and made a profit of $350.00 overall on the whole shabang.
That is how it works in theory as an example. I'm not sure how much the options would increase in value, I used $2.50 from $1.10 as the stock dropped to the $70.00 range but it could be less but regardless the play would have been insurance and you certainly would have at least guaranteed that you would have broken even or made a few sheckles and not lost money. I simplified it for you but that is one way to do it.
The most opportune time to do it would have been when the stock was at $77/78 range and bought the Sept 05 $70 put. The you would have most likely made money. If the stock goes back up you basically get back to even as the option expires worthless or somewhat less than what you bought it for but you recoup the losses from the stock dropping if it goes back up.
Always have a plan and assess your risk. How much you can afford to lose and set a stop and honor it. You cannot call yourself a trader or give anyone else advice if you cannot do that for yourself. From a friend.
My advice just may not be good advice, that's all. 
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