Toll Brothers Stock Eyes Multi-Year Highs After Dividend Increase

TOL is up over 61% year-over-year

Assistant Editor
Mar 10, 2021 at 9:07 AM
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The shares of Toll Brothers (NYSE:TOL) are making a break for it on the charts, up 2.1% ahead of the opening bell. This comes after the luxury home builder announced it will increase its quarterly cash dividend by 54% to 17 cents per share.  If these pre-market gains hold, TOL will be nearing its Feb. 12 15-year high of $56.95.

Shorter term, Toll Brothers stock saw a pullback last week contained by its 20-day moving average.  Longer term, TOL's 160-day trendline contained a dip back in January. The stock is up 61.1% year-over-year, and could be overdue for some bull notes, considering eight of 13 in coverage rate TOL a "hold" or worse.

An unwinding of pessimism has likely put some wind at the stock's back on the charts this month. Short interest is off 24.8% in the last two reporting periods, but the 4.53 million shares sold short still represent 4.1% of the stock's available float and it would take over two days to cover at TOL's average pace of trading.  

Meanwhile, the options pits lean bearish, with puts popular. This is per the stock's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 90% of readings from the past year. In other words, puts are being picked up at a faster-than-usual pace.

Those looking to speculate on Toll Brothers stock's next move with options can get premiums for a bargain right now. The security's Schaeffer's Volatility Index (SVI) of 81% sits in the relatively low 21st percentile of its annual range. This means options traders are pricing in relatively low volatility expectations. What's more, the security's Schaeffer's Volatility Scorecard (SVS) sits at a high 96 out of 100, meaning TOL has exceeded option traders' volatility expectations during the past year.

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