Today is time to earn more income on luxury homebuilder Toll Brothers (TOL).

A simple change in how you buy or trade equities can lead to an amazing 40% annualized return. I would rather get paid upfront and wait for the stock price to come to my level than rush out and buy common stock outright. Put selling allows investors to name their price and only have to purchase stock if the share are at or below the strike price at expiration (sometimes you are put stock early if shares fall significantly). It is like shopping for a car and waiting for the big deals to buy but better since you are paid to wait.

Toll Brothers is a $5.5 billion company that operates in 22 states. Business has been good, over the past 12 months, Toll Brothers generated $7.3 billion in sales a 9% increase and earnings per share (EPS) has more than doubled over the last three years from $2.37 to $4.88.

Toll Brothers finances are fantastic and shares trade at a great price. Shares currently trade with an EV/EBITDA of just 9.9 (companies five year average is 15.5). The S&P 500 Index trades with an EV/EBITDA of 13.4.

Shares found support on the 200 DMA (day moving average) and have since rocketed higher on the latest earnings announcement.

Yesterday's pullback toward $39 is our opportunity today.

Trade details:

Sell to open October 18, 2019 $39 puts on Toll Brothers for $1.25 using a limit order and earn 3.2% upfront payment.

At expiration if shares are above $39: put sellers will keep the $1.25 for a 40.4% annualized return.

At expiration if shares are below $39: put sellers will buy shares at a 3.7% discount to yesterday's closing price ($39 strike - $1.25 premium received is the positions true cost basis). Once you own stock again you can turn around and sell covered calls for more income.

Use a stop loss at $33.50. Shares will have broken its uptrend and fallen below all of its 2019 lows. Protect your capital and take the small 11.3% loss on your cost basis.

The business is doing great and we have the opportunity to collect an amazing income payment. If you are looking to generate strong total returns or just high income payments in this market put selling and covered calls is a great place to look.

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. The information provided should NOT be considered advice. The topics discussed are risky and have the potential to lose a substantial amount. I am not an investment professional and therefore do not offer individual financial advice. Please do your own research before investing.