Call buyers rack up mileage in $HTZ

Option traders have quadrupled their money in bullish positions on Hertz.

On Aug. 21, Investitute’s tracking systems detected the purchase of 3,500 September $17.50 calls for $1.25 to $1.50 with shares at $17.47. This was clearly fresh buying, as volume was more than double the strike’s open interest of 1,455 contracts.

Today those calls traded for $5.66, an average gain of more than 300 percent. The stock rose 32.4 percent in the same time, a big move but one that is still well below that of its options.

Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

HTZ was up 3.02 percent to close at $23.18 today. The stock has rallied in the last week as Hurricane Harvey has created strong demand for car rentals.