Hertz Global Holdings, Inc. (HTZ) Traders Buck Bearish Trend

Hertz Global Holdings, Inc. call buyers anticipate a breakout in upcoming months

by

Published on Dec 29, 2014 at 3:08 PM
Updated on Apr 20, 2015 at 5:32 PM

Hertz Global Holdings, Inc. (NYSE:HTZ) has tacked on 2.7% this afternoon to trade at $25.29. Options traders have responded by targeting calls over puts by a more than 2-to-1 margin. What's more, one group of bettors is wagering on a solid advance over the next few months.

Diving into the details, today's most active strike is the March 29 call, where buy-to-open activity is transpiring. These traders are wagering on HTZ to topple $29 by the close on Friday, March 20, when the options expire. However, it's worth noting that the shares haven't ended a session above that mark since early September. As such, delta on the call is just 0.25 -- signifying a roughly 1-in-4 chance the contract will be in the money at expiration.

From a longer-term technical perspective, HTZ has underperformed the broader market. Specifically, the stock has surrendered 11.6% of its value in 2014, and has struggled to break north of the $25-$25.50 area in recent months. However, HTZ is up more than 7% in December -- and enjoyed its biggest gain of the year last Tuesday -- after announcing a rate hike for rental cars.

Option bears have set their sights on the equity -- today notwithstanding. Hertz Global Holdings, Inc.'s (NYSE:HTZ) 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.89 registers in the 84th percentile of its annual range. In other words, traders have bought to open puts over calls at a faster-than-usual rate during the last 10 weeks.

Daily Chart of HTZ since August 2014


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