Calls Hot On Gaining Hertz Global Holdings, Inc. (HTZ)

Call buying has been popular on Hertz Global Holdings Inc (NYSE:HTZ) recently, but some of it may be hedging

by Josh Selway

Published on May 15, 2015 at 12:06 PM
Updated on May 15, 2015 at 12:16 PM

Even after the company reported a first-quarter decline in revenue, and the stock saw its price target cut to $28 from $31 at MKM Partners, Hertz Global Holdings Inc (NYSE:HTZ) is 5.3% higher today at $20.59 -- and giving an assist to other names in the sector. Helping the shares is an ambitious plan to hike prices this summer, along with news that Jana Partners upped its stake in the equity. Options bulls are stepping up, with calls crossing at seven times the average intraday pace, with 28,000 of the contracts exchanged versus 15,000 puts.

The most popular is the June 21 call. It appears traders could be buying the option to open, meaning they expect HTZ to take out $21 by the close on Friday, June 19, when the soon-to-be front-month options expire.

It hasn't been a good year for the stock. So far in 2015, the shares have given back over 17%, while underperforming the S&P 500 Index (SPX) by over 18 percentage points in the past three months. Even so, HTZ option traders continue to target calls. During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), almost five calls have been bought to open for each put. The resultant 10-day call/put volume ratio of 4.83 is higher than 86% of readings from the past year, meaning call buying has been more popular than usual.

Naturally, some of this call buying could be a result of shorts hedging their bets. Almost 35 million Hertz Global Holdings Inc (NYSE:HTZ) shares are sold short, representing over eight sessions' worth of trading, at the equity's average daily volume.


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