Toll Brothers has been stuck in the mud all year, and one investor apparently thinks that its shares will continue to lag.
optionMONSTER's tracking systems detected the sale of more than 10,000 June 20 calls for $0.80 and $0.85 against open interest of just 856 contracts. The trade pushed total option volume to 8 times greater than average in the Pennsylvania homebuilder.
TOL fell 0.05 percent to $20.16 yesterday and has been trading mostly between about $20 and $21 since early January. Some investors also profited by betting against it last week, using May puts.
The company has fared better than most companies in the sector because it focuses on more-affluent customers who rely less on subprime mortgages to finance houses. Its last earnings report on Feb. 23 beat expectations, and the next release is scheduled for after the bell on May 25.
Yesterday's call seller apparently thinks that TOL will remain in its current range or slip lower. The trader may have been looking to earn income on an existing position in the shares. (See our Education section)
Regardless, the strategy implies that they think the stock will stay below about $20.80 for the next 4-1/2 weeks until the June expiration.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.