How one investor is playing Hertz
Chris McKhann | [email protected]
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.