Toll Brothers is trading at multi-year highs, and an odd put spread is apparently looking to profit from a further move higher.
A trader bought 4,000 January 32 puts for $2.34 and sold 5,000 January 35 puts for $3.80 at the same time, according to optionMONSTER's data systems. This is a credit spread, but it adds the additional short puts at the higher strike.
The maximum gain comes with the stock anywhere above $35 at expiration. The risk is if shares are below $32, at which point the vertical spread would see at a maximum loss and the trader would need to buy shares if assigned on the additional short puts. (See our Education section)
TOL is off fractionally at $33.37 this afternoon, a day after seeing its highest close in more than five years. The homebuilder's shares were also at a five-year intraday high of $33.68 on Aug. 21, setting up a potential bearish double top.
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