OptionsHouse

Options Trading News

October 11, 2013  Fri 12:21 PM CT

HTZ: SEE CHART GET CHAIN FIND STRATEGIES
Traders continue to look for Hertz to bounce following last month's sharp selloff.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,500 December 24 calls for $1.02 to $1.06 and the sale of some 5,000 December 26 calls for $0.48. Volume was more than twice the previous open interest at each strike, indicating that new money as put to work.

The trade cost about $0.08 and is highly leveraged to gains in the car-rental stock. It will earn a maximum profit of 2,400 percent on a move to $26, but profits will erode above that level because twice as many contracts were sold at the higher strike.

The investor probably bought shares at a higher price and is using this ratio spread to repair the losing trade. This way he or she will get huge leverage back to $26 and then be able to exit at higher prices. (See our Education section for more on how to manage your portfolio effectively with options.)

HTZ is up 3.86 percent to $23.41 in afternoon trading. It spent most of the last six months over $24 but then gapped lower on Sept. 26 after lowering full-year profit guidance. The stock has managed to hold its ground above $21--a key consolidation area from March--which could make some chart watchers think that it's due for a bounce.

Overall calls outnumber puts by a bullish 4-to-1 ratio so far today, according to the Heat Seeker. The company also saw bullish options trades on Oct. 1 and Oct. 4.
Share this article with your friends


Related Stories

HTZ

Bulls riding transport bandwagon

July 29, 2015

Transports have been snapping back to life, and traders have been snapping up calls in industries ranging from rental cars to railroads.

HTZ

Traders turn quick profits in Hertz

July 23, 2015

The car-rental giant gapped up after completing its long-awaited accounting review and updating guidance at the end of last week, but it quickly fell back.

HTZ

Notable option activity in equities

July 7, 2015

Nearing the halfway mark in today's session, here are the individual equity names with unusual option activity on optionMONSTER's ActionTracker data system.

HTZ

Trader looking for rebound in Hertz

July 7, 2015

The rental-car giant has lost 31 percent of its value since the start of January, struggling with weak pricing and competitive concerns over ride-sharing services such as Uber.

OptionsHouse

Premium Services

Archived Webinar

Education & Strategy

Options Academy: At the Break

So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

View more education articles »