Looking back to 99 days ago, Toll Brothers (TOL) priced a 6,250,000 share secondary stock offering at $32.00 per share. Buyers in that offering made a considerable investment into the company, expecting that their investment would go up over the course of time and based on early trading on Friday, the stock is now 15% above the offering price.Investors who did not participate in the offering but would be a buyer of TOL at a cheaper price, might benefit from considering selling puts among the alternative strategies at their disposal. One interesting put contract in particular, is the January 2016 put at the $30 strike, which has a bid at the time of this writing of $3.10. That would result in a cost basis of $26.90 per share before broker commissions in the scenario where the contract is exercised. If the contract is never exercised, the put seller would still keep the premium, which represents a 10.3% return against the $30.00 purchase commitment, or a 5.4% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Use Options For a Chance To Buy TOL at a 28% Discount
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