Avis Budget Stock Hits the Brakes Despite Quarterly Win

CAR remains above its year-to-date breakeven level, though

Digital Content Manager
Nov 1, 2022 at 11:00 AM
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The shares of Avis Budget Group Inc (NASDAQ:CAR) are down 10.9% to trade at $210.80 at last check, reversing premarket gains after the rental car company reported a third-quarter earnings and revenue beat. Avis attributed the upbeat results to increasing travel demand, adding it expects strong performance to continue into the fall and through the holiday season. Translation: get your travel planning ironed out sooner, rather than later!

Options traders are chiming in, with 3,156 calls and 2,019 puts exchanged so far, volume that's triple what is typically seen at this point. Most popular is the 11/4 250-strike call, with new positions being bough to open. 

This penchant for bullish bets hasn't always been the norm, however. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio of 2.30 sits higher than 94% of readings from the last year. This means puts have been getting picked up at a much-quicker-than usual clip.

Options sure look like an attractive route at the moment, as they are affordably priced. This is per Avis Budget stock's Schaeffer's Volatility Scorecard (SVS) of 97 out of 100, which suggests the equity has exceeded option traders' volatility expectations during the past year.

A short squeeze could help recoup some of CAR's 25% deficit in the last six months. Short interest is up a whopping 27.8% in the most recent reporting period, and the 5.12 million shares sold short now account for 10.8% of the stock's available float, or roughly one week's worth of pent-up buying power, at its average daily pace of trading.

Despite today's price action, Avis Budget stock is up 42% this quarter alone, thanks in part to a 15% bull gap on Oct. 24 after a lofty upgrade from J.P. Morgan Securities. One trendline in focus is CAR's year-to-date breakeven level, which is so far holding amid today's sharp reversal. 


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