diff --git a/bin/pt-ioprofile b/bin/pt-ioprofile
index 41e3f3b7..123cd0a0 100755
--- a/bin/pt-ioprofile
+++ b/bin/pt-ioprofile
@@ -201,7 +201,10 @@ parse_options() {
          _parse_config_files "$user_config_file"
       done
    else
-      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf" "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf"
+      if [ "${HOME:-}" ]; then
+         _parse_config_files "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      fi
    fi
 
    _parse_command_line "${@:-""}"
diff --git a/bin/pt-mext b/bin/pt-mext
index 088ca107..0fb7e1fb 100755
--- a/bin/pt-mext
+++ b/bin/pt-mext
@@ -242,7 +242,10 @@ parse_options() {
          _parse_config_files "$user_config_file"
       done
    else
-      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf" "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf"
+      if [ "${HOME:-}" ]; then
+         _parse_config_files "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      fi
    fi
 
    _parse_command_line "${@:-""}"
diff --git a/bin/pt-mysql-summary b/bin/pt-mysql-summary
index df639463..287d39ad 100755
--- a/bin/pt-mysql-summary
+++ b/bin/pt-mysql-summary
@@ -203,7 +203,10 @@ parse_options() {
          _parse_config_files "$user_config_file"
       done
    else
-      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf" "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf"
+      if [ "${HOME:-}" ]; then
+         _parse_config_files "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      fi
    fi
 
    _parse_command_line "${@:-""}"
diff --git a/bin/pt-pmp b/bin/pt-pmp
index 63504fbe..8f029967 100755
--- a/bin/pt-pmp
+++ b/bin/pt-pmp
@@ -244,7 +244,10 @@ parse_options() {
          _parse_config_files "$user_config_file"
       done
    else
-      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf" "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf"
+      if [ "${HOME:-}" ]; then
+         _parse_config_files "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      fi
    fi
 
    _parse_command_line "${@:-""}"
diff --git a/bin/pt-sift b/bin/pt-sift
index e21a4a2e..53f5e4d8 100755
--- a/bin/pt-sift
+++ b/bin/pt-sift
@@ -242,7 +242,10 @@ parse_options() {
          _parse_config_files "$user_config_file"
       done
    else
-      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf" "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf"
+      if [ "${HOME:-}" ]; then
+         _parse_config_files "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      fi
    fi
 
    _parse_command_line "${@:-""}"
diff --git a/bin/pt-stalk b/bin/pt-stalk
index 653614fc..568f4587 100755
--- a/bin/pt-stalk
+++ b/bin/pt-stalk
@@ -255,7 +255,10 @@ parse_options() {
          _parse_config_files "$user_config_file"
       done
    else
-      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf" "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf"
+      if [ "${HOME:-}" ]; then
+         _parse_config_files "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      fi
    fi
 
    _parse_command_line "${@:-""}"
diff --git a/bin/pt-summary b/bin/pt-summary
index 0582e253..af68ccf7 100755
--- a/bin/pt-summary
+++ b/bin/pt-summary
@@ -210,7 +210,10 @@ parse_options() {
          _parse_config_files "$user_config_file"
       done
    else
-      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf" "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf"
+      if [ "${HOME:-}" ]; then
+         _parse_config_files "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      fi
    fi
 
    _parse_command_line "${@:-""}"
diff --git a/lib/bash/parse_options.sh b/lib/bash/parse_options.sh
index b07074ec..eee9e154 100644
--- a/lib/bash/parse_options.sh
+++ b/lib/bash/parse_options.sh
@@ -213,7 +213,11 @@ parse_options() {
          _parse_config_files "$user_config_file"
       done
    else
-      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf" "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      _parse_config_files "/etc/percona-toolkit/percona-toolkit.conf" "/etc/percona-toolkit/$TOOL.conf"
+      # conditional in case $HOME isn't set;  e.g. tool launched from init
+      if [ "${HOME:-}" ]; then
+         _parse_config_files "$HOME/.percona-toolkit.conf" "$HOME/.$TOOL.conf"
+      fi
    fi
 
    # Finally, parse the command line.
diff --git a/t/lib/bash/parse_options.sh b/t/lib/bash/parse_options.sh
index ca6326c8..4beba5a0 100644
--- a/t/lib/bash/parse_options.sh
+++ b/t/lib/bash/parse_options.sh
@@ -1,6 +1,6 @@
 #!/usr/bin/env bash
 
-plan 83
+plan 84
 
 TMPFILE="$TEST_PT_TMPDIR/parse-opts-output"
 TOOL="pt-stalk"
@@ -258,6 +258,19 @@ is "$OPT_NOTIFY_BY_EMAIL" "" "Bug 1038995: --notify-by-email is empty by default
 parse_options "$T_LIB_DIR/samples/bash/po005.sh" --notify-by-email foo@bar.com
 is "$OPT_NOTIFY_BY_EMAIL" "foo@bar.com" "Bug 1038995: ...but gets set without errors if specified"
 
+# ############################################################################
+# Bug 1266869: fails when $HOME unset
+# https://bugs.launchpad.net/percona-toolkit/+bug/1266869
+# ############################################################################
+
+TMP_HOME="$HOME"
+unset HOME 
+OUTPUT=`parse_options $T_LIB_DIR/samples/bash/po001.sh 2>&1` 
+echo "$OUTPUT" > "$TMPFILE"
+cmd_ok "grep -q -v unbound $TMPFILE" "No error when \$HOME is not set"
+HOME="$TMP_HOME"  # just in case further tests below need it
+
+
 # ############################################################################
 # Done
 # ############################################################################