TOL stock split

Shorts got crushed today with TOL..

http://biz.yahoo.com/cbsmb/050609/c156fb7d4f314ca8a6fefa7eb1d84fb6.html?.v=1

What happens if u were to be short prior to JUn. 21.. how does it work out when u are short stock going into a split?

 

you are short twice as many shares but the same $ amount.

 

What happens if u cover between jun21 and july 8?

What do they mean by splitting the shares in the form of a dividend?

 

i didnt read it earlier. looks like july is the date it trade on a split basis.

 

So what happens on Jun 21? Can someone explain as to how the whole thing works?

 

You are short 100 shares at 95 = $9500.

TOL goes ex-dividend on 21 June. That means it trades without the dividend on that date. The NYSE will adjust the price to handle a 100% stock dividend (effectively a two-for-one split).

At the close on 6/20 TOL is trading at 100. You are still short 100 shares. Based on the NYSE adjustment it will open Tuesday at 50 (or thereabouts). Holders of TOL shares will have their accounts credited with a 100% dividend. Thus. if you held 100 shares you will now have 200.

However, the value remains the same, e.g., 100 x $100 =$10,000, 200 x $50 = $10,000.

You are now short 200 shares @50. Value is the same as it was prior to the split. Options work the same way for splits/large dividends.

The July date is the date that TOL will actually deliver physical shares but it has nothing to do with the bookkeeping date of 6/20.

 

For all intensive purposes, a stock dividend is the same as a stock split

(though the underlying accounting is different)

 

I've been watching TOL and finally today for the first time purchased 2 Sept 105 Calls @ $4.50 (TOLIA) when the stock was around $95.69...

I then went out of town and when arriving back this evening I saw it moved up nicely at the end of the day and the options are now $5.10 and after hours is looking good....

A long time ago I had this kind of dividend split happen on a stock that I also had calls on and if memory serves me correctly my 10 calls became 20 calls at a lower price but it was awhile ago so can't recall exactly..

 

TOL has been in the Investors Business Daily newpaper last week, with institutional support.

They sold it off briefly/strongly, but at the end of the day,
it still looks strong, like much of the market.

Interesting that sell off was notably stronger than usual.

Not a prediction, however with the new dividend law;
could be even more bullish.

 

They did again today as TOL broke and closed above $100..yet another 52 week High..I closed out my 2 Sept 105 Calls for $6.10 that I had purchased last week at $4.50 about an hour before the close and when the stock was still below $100. to lock in my profit....am going to buy them back on any dips..

TOL is just awesome IMO