IB Options Brief: Hertz Global Holdings, Inc. (HTZ) & Nabors Industries, Ltd. (NBR)

Posted December 7th, 2011 by Caitlin Duffy in Unusual Activity

HTZ ñ Hertz Global Holdings, Inc.
A sizable ratio call spread on the car and truck rental company indicates one strategist is positioning for shares in Hertz Global Holdings to potentially post double-digit gains during the next six weeks. Shares in the Park Ridge, New Jersey-based company slipped 0.35% to $11.93 in the first half of the session.

The bullish player appears to have parked the ratio spread in the Jan. 2012 contract, buying 3,150 calls at the $12.5 strike for a premium of $0.70 each, and selling 6,300 calls up at the $17.5 strike at a premium of $0.01 apiece.

Net premium paid to initiate the spread amounts to $0.68 per contract, thus positioning the trader to profit should shares in HTZ rally 10.5% to surpass the effective breakeven point at $13.18. The investor may enjoy maximum potential profits of $ in the event that the car rental companyís shares surge 46.7% to settle at $17.50 at expiration day next year.

NBR ñ Nabors Industries, Ltd.
Shares in Nabors Industries, which, as of Tuesdayís close, had increased roughly 9.0% since the end of last week, slipped into the red on Wednesday. The stock fell 2.0% to $18.31 by 12:35 PM ET; however, call activity on the oil equipment and services provider this morning suggests one trader expects shares to get back on the rally-track.

The investor appears to have purchased more than 1,700 calls at the Mar. 2012 $22 strike for an average premium of $0.99 a-pop. Profits may accumulate on the position if shares in Nabors jump 25.5% to exceed the average breakeven price of $22.99 at expiration day next year. NBRís shares last traded above $22.99 back on August 4.

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