Half of my limit order filled today.

music selection:  “If I Go Away” — Savatage

Hertz rental is a doomed company.  It’s stock has seen strange behavior during COVID-19 while people are suddenly at home with time on their hands have access to commission free trades with RobinHood and other apps have bid it past reason.

I feel it is certain the shares will be worth near zero by the time the 21JAN2022 LEAPs expire.  This seems to be the consensus.  Strangely, the options market is pricing the premium on 1.5 strike puts as if the stock is expected to have some residual value.  I put in a limit order for 10 puts at 65 cents a share a couple weeks ago.  The price got close but has been range bound around 70 to 75 cents since then.  I went ahead and upped my limit order to 70 cents.  Half of my contracts cleared the market.  It is likely the rest will clear market tomorrow.

Should shares ultimately be worthless as management is guiding, I will earn 80 cents per share in profit on 70 cents at risk.  That is greater than a double on a more or less sure bet.  I like my chances.

Devour your prey raptors!

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Half position HTZ puts

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6 thoughts on “Half position HTZ puts

  • September 11, 2020 at 2:26 pm
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    What’s your take on CHKAQ puts? I’m short some of the stock, but paying through the nose on the borrowing costs.

    Reply
    • September 12, 2020 at 3:29 pm
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      Joe,

      I’m not familiar with that stock. I assume since the ticker ends in “Q” the company is in bankruptcy. You’ll always pay a lot to borrow against a BR company. Puts can be better but they are usually very highly priced due to the near certainty of payout. Also, I can’t offer individualized investment advice. That requires licenses. I’m just a guy on the internet exercising his 1st Amendment rights.

      Reply
      • September 20, 2020 at 1:10 pm
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        I shorted it when it was CHK – Chesapeake Energy. Once they bought the chapter they got some extra letters. I thought since you live in the oil/gas patch you’d be all over them, but maybe that’s not an investment focus for you.

        In any case, I feel confident that CHKAQ shares will be cancelled when Chesapeake leaves bankruptcy, so that their bondholders can get a stake in the upside on equity. I just don’t know how long I want to be right without getting the payout.

        Reply
        • September 20, 2020 at 8:23 pm
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          Joe,

          I looked at puts on CHK but couldn’t wrap my head around exactly how long they might be able to kick the can down the road. Puts were very expensive and there was a non zero chance they would limp along as a zombie company for a long time. Bon Ton Stores took seven years to go bankrupt once they got into real trouble.

          Didn’t want to bet against CHK and their assets and expertise, even in a dying industry.

          Reply
  • September 11, 2020 at 8:14 pm
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    I’d be nervous about this HTZ trade a couple/few months before news on the first vaccines.

    Reply
    • September 12, 2020 at 3:30 pm
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      Chris,

      There will certainly be volatility. I went with the 2022 expiry to give plenty of time for the stock to go to zero.

      Reply

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