11/11/2009 – ThetaOptions Margin Portfolio – Toll Brothers Short Play for Christmas…sounds yummy!

Toll Brothers gave us a nice fourth quarter report this morning….they’re loosing LESS than expected.  This company had a P/E of 6 back in the 2006 when they made $700M; and their stock traded at $30.  We seriously can’t see them maintaining a P/E of 20, while they continue to LOSE less than expected.  Therefore, rather than Short the stock @ $21, we decided to enter a DEC call side naked short in our margin account.

Order:

Sell to Open: (5) 22 DEC CALL – $0.85 credit

Position: $2000 margin