Traders step on the gas with Hertz

By David Russell,

Shutterstock photo

The bulls want to go places with Hertz Global.

optionMONSTER's Heat Seeker monitoring system detected the purchase of some 5,000 January 29 calls for $0.73 and the sale of an equal number of January 20 puts for $0.64. Volume was more than 5 times the previous open interest at each strike, indicating that new positions were initiated.

The strategy cost just $0.09 and is similar to owning stock in the car-rental company. If it rallies, the calls owned will appreciate in value while the puts sold short will dwindle. This way, he or she can cheaply position for upside with the calls while also programming a buy order at lower prices by selling the puts. (See our Education section)

HTZ declined 3.61 percent to $24.30 yesterday as worries about conflict with Syria sent most travel-related names lower. It surged more than 65 percent between January and mid-July but has been working its way lower since. Yesterday's bullish option play is apparently looking for the longer-term uptrend to continue.

Some 13,000 Hertz options changed hands in the session, more than 5 times normal amounts.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: HTZ

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