Strategy positions for drop in Hertz
David Russell | [email protected]
optionMONSTER's Depth Charge monitoring system detected the purchase of 11,575 March 10 puts for $0.30 and the sale of an equal number of March 13 calls for $2.25. There was barely any open interest at either strike before the trade appeared, indicating that new positions were initiated.
The investor probably owns shares in the car-rental company and is worried about a selloff. He or she collected a credit of $1.95 but will be forced to sell their stock for $13 if it's above that level on expiration. Below it, the trader will have the right to sell for $10.
This combination trade locks in a maximum exit price of $14.95 and a minimum of $11.95. See our Education Section for more on how calls and puts can be used to manage risk.)
HTZ, which has been moving sideways for the last three years, fell 1.83 percent to $14.45 yesterday. It's currently near the top of its recent trading range, which could be leading some chart watchers to expect a push lower--especially if the broader market weakens.
Total option volume in the name was 6 times greater than average yesterday, according to the Depth Charge.