Will Toll Brothers Earnings Take A Toll On The Stock?

Toll Brothers Inc TOL began the week on a positive note, with its stock adding almost 4% to close at $70.85 on Monday. The company is scheduled to report earnings Tuesday after the closing bell.

On CNBC's "Options Action," Mike Khouw of Optimize Advisors said Toll Brothers traded more than three times the average daily volume on Monday.

Calls outpaced puts and the options market is implying a move of close to 7% after the earnings report, which is in-line with the post-earnings average stock price movement over the past eight quarters, he added.

There were buyers of 660 January 60 puts at an average price of $1.20 a contract, Zhang mentioned. Traders are betting that the stock will pull back 18% by January expiration.