HTZ – Hertz Global Holdings, Inc. – Bullish options traders are loading up on Hertz Global call options this morning to position for a substantial medium-term rally in the price of the underlying shares. The second-largest U.S. car rental company’s shares rallied 3.05% in the first half of the trading session to secure an intraday high of $10.11. Share price appreciation today follows reports Thursday that a request by investors in Dollar Thrifty Automotive Group, Inc., Hertz’s $1 billion proposed takeover target, to stop a September 16 shareholder vote regarding the sale of the company to Hertz was rejected by a Delaware judge. Dollar Thrifty shareholders sought an injunction in order to reconsider a competing bid from Avis Budget Group, Inc. Bullish options players, perhaps emboldened by the judge’s decision, flocked to Hertz in morning trading to prepare for shares to head higher in the remainder of 2010. Investors purchased at least 12,200 calls at the December $12.5 strike for an average premium of $0.57 each. Call buyers stand ready to make money should HTZ shares surge 29.3% in the next several months to exceed the average breakeven price of $13.07 by December expiration. Hertz’s shares last traded above $13.07 back on May 13, 2010.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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