Hertz Options Bears Load Up on Puts Ahead of Earnings

Hertz will report earnings after the close tonight

Managing Editor
May 6, 2019 at 2:08 PM
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Rental car icon Hertz Global Holdings Inc (NYSE:HTZ) will step into the earnings confessional after the market closes today. Ahead of the company's first-quarter report, options traders are coming out of the woodwork, with an emphasis on puts.

Specifically, nearly 5,900 HTZ options have changed hands today, three times the average intraday amount and double the number of calls traded. Leading the charge is the weekly 5/10 21.50-strike put, with new positions being opened. Buyers of these puts expect HTZ to run into some post-earnings headwinds by the end of this week.

Looking at Hertz's earnings history, it's somewhat surprising options traders are loading up on puts. The stock has historically outperformed in the session after earnings, closing higher in three of the last eight quarters, including a 24.6% surge back in August. This time around, the options market is pricing in a 18.4% swing for tomorrow's trading, regardless of direction, much loftier than the 12.8% next-day move HTZ has averaged over the last two years.

But there is reason to be cautious, since the equity's 14-day Relative Strength Index (RSI) of 68 sits on the cusp of overbought territory. At last check, Hertz stock was basically flat at $19.63, looking for its fourth-straight win. On its way to a 43.4% gain in 2019, HTZ has seen pullbacks contained by the $16 level. However, the shares remain a ways off their Aug. 22 12-month high of $22.37. 

Daily Stock Chart HTZ

 

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