Bearish positions opened in Hertz months ago are proving that they were worth the wait.
On March 21, Investitute’s tracking systems identified the purchase of 3,100 May $20 puts for $1.14 to $1.59 with shares at $20.18. These were clearly new positions, as open interest in the strike was a mere 10 contracts before that session began.
Today those puts traded up to $7.85, more than quadruple their purchase price. Although shares plunged a whopping 39.5 percent in the same period, that move still pales in comparison to the leverage provided by the options.
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.
HTZ dropped 14.09 percent today to close at $12.80. This morning the car-rental company gapped down from the $15 level after posting a first-quarter loss yesterday evening that was wider than analysts had anticipated.
For more information on Unusual Option Activity, visit this page.