During morning trading, an investor rolled a short put position on homebuilding name
out to the June expiration month on a potential bet that the stock could hit a floor during the next half-year.
Toll, whose shares are currently down eight cents to $17.95, did not announce any news today. TOL shares are currently 16% off its recent November high of $21.41. The company has not disclosed a date to announce earnings figures, but the market expects the quarterly report sometime around March 4.
At least one investor is betting that TOL shares will continue to see limited downside in the later-term, and bought to close roughly 3,000 January 17.5 puts and sold to open the same number of June 17-strike puts (out-of-the-money by about 5%).
The near-the-money January 17.5 puts crossed the tape for 65 cents per contract (ask price), and the June 17 puts traded for $1.85 per contract (bid price), meaning the investor collected roughly $1.20 on this roll-out.
The January 17.5 puts, home to open interest of 8,812 contracts, and the June 17 puts, home to 363 contracts of open interest, are both currently trading down two cents on the day.
A roll-out such as this is not necessarily bullish nor bearish, but it's interesting that at least one investor is not finished with these options and decided to maintain short put exposure into a later-dated series.
At the time of publication, Pyle did not hold any position on the stock mentioned. Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."