Options Trading News

November 8, 2013  Fri 12:17 PM CT

On investor is is looking for a limited bounce in Hertz as it trades at seven-month lows.

optionMONSTER's Heat Seeker system shows that a trader bought 1,500 June 20 calls for $3.25 and sold 3,000 June 26 calls for the bid price of $1. The volumes were multiples of their respective open interests, clearly indicating new activity.

The trader paid $1.25 to open this ratio spread, just $0.05 of premium given that the stock was at $21.20 when the trade was placed. (See our Education section)

The maximum gain on the call spread comes if HTZ climbs to $26 by that June expiration. Above that the trader is effectively short shares through the additional calls that were sold.

HTZ is now down 0.47 to $21.27, which would be its lowest close since March if these levels hold for the rest of the afternoon. The car-rental giant dipped below $20 on Tuesday after reporting earnings, but shares were above $27 in mid-September.

Total calls in the name are outnumbering puts by 11 to 1 so far today.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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