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Hertz Global Holdings Inc (HTZ) has begun trading new options for a November 14th expiration, featuring a put contract at a $6.50 strike price with a current bid of 65 cents. If executed, this contract requires the buyer to purchase shares at $6.50, effectively lowering their cost basis to $5.85, compared to the current share price of $6.72. The contract carries a 67% chance of expiring worthless, potentially yielding a 10% return on the cash commitment, or 84.8% annualized.
Additionally, a call contract at the $7.00 strike price is available with a bid of 80 cents. If an investor purchases HTZ shares at $6.72 and sells this call as a covered call, they could achieve a total return of 16.07% if the stock is called away at expiration. There is a 39% chance that this call option will expire worthless, which would allow the investor to retain shares and collect the premium for an additional 11.9% return, or 100.95% annualized.
The implied volatility for the put contract is 204% while the call contract is at 179%. The actual trailing twelve-month volatility for HTZ is calculated at 99%.
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