$CAR bears in the driver’s seat

Option traders tripled their money on downside positions in Avis Budget today.

On May 18, Investitute’s market scanners identified the purchase of 2,000 August $45 puts bought in one print for $4 with shares at $43.81. This was clearly a new position, as open interest in the strike was only 314 contracts before that session began.

Those puts were marked at $12 today, 3 times their purchase price. The stock plunged 25% in the same time period, a large move but well below that of its options on a relative basis.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

CAR dropped 15.19% to $32.86 today. Shares fell after the auto-rental giant lowered its full-year revenue outlook.