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.
Share this article with your friends

Related Stories


What's behind put buying in Hertz

September 22, 2015

The car-rental giant had broken through upside resistance last week before pulling back with the rest of the stock market.



The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

Options Academy: More on the Covered Call Strategy

Last week, we talked about the Covered Call and the misconceptions that surround it. We spoke about how an investor must realize that the Covered Call is actually a premium collection strategy and not so much a directional one. If an investor can grasp this idea, the investor stands to do a heck of a lot better in the strategy than they currently do.

View more education articles »