Options Intelligence Report: Hertz Global Holdings, Inc. (HTZ) & iShares MSCI EAFE Index Fund (EFA)
HTZ ñ Hertz Global Holdings, Inc.
Options activity on the holding company for Hertz, a worldwide car rental and equipment rental business, suggests one investor is taking a long-term bullish stance on the stock. The optimistic options player appears to have purchased a large chunk of married HTZ put options in order to position for share price appreciation, while still hedging against potential price erosion through December expiration. Hertz Global Holdingsí shares edged 0.20% lower in the first half of the trading day to stand at $14.13.
It looks like the investor picked up 10,000 puts at the December $10 strike for a premium of $0.70 each at 11:09 am (ET) this morning when shares of the underlying stock were trading at a volume-weighted average price of $14.44 each. The put options serve as long-term downside protection for the investor in case Hertzís share price nose-dives 34% to the downside in the next seven months to breach the effective breakeven price of $9.30. But, the acquisition of both stock and puts indicate the investor anticipates bullish movement in Hertzís share price. Shares of the holding company must exceed $15.14 ñ the price paid per share plus the cost per put option ñ before the investor realizes gains on the long underlying stock position.
EFA ñ iShares MSCI EAFE Index Fund
Posturing in put options on the EFA, an exchange-traded fund which tracks the price and yield performance of the MSCI EAFE Index ñ an index created as a benchmark for international stock performance ñ with stocks from Europe, Australasia and the Far East, suggests some investors anticipate additional bearish movement in the price of the underlying fund through May expiration. Shares of the fund are currently down 0.50% to $53.98 as of 12:45 pm (ET).
One pessimistic individual purchased a plain-vanilla debit put spread by picking up 6,800 now in-the-money puts at the May $54 strike for a premium of $1.13 each, marked against the sale of the same number of puts at the lower May $52 strike for $0.54 apiece. Net premium paid for the bearish spread amounts to $0.59 per contract. The investor reels in maximum potential profits of $1.41 per contract if shares of the EFA decline another 3.7% from the current price to trade at or below $52.00 by expiration.
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