HTZ Analysis

Hertz Global Holdings Inc. (HTZ)

Update 8/14/2017: HTZ missed earnings estimate by a large margin. The Street expected a 23 cent loss per share; it got a $1.90 loss. The stock price rose (yes, “rose” is correct) by nearly $3 in the session after publication, and continued to rise steadily for the three ensuing days. I exited with shares at $19.50.

Shares rose by 33.1% over my six-day holding period, or a +2,014% annual rate. The options position produced a -41.5% loss on debit for a -2,525% annual rate.

Zacks Investment Research gave HTZ a 1.32% earnings surprise predictor score, probably not enough to warn me off of the trade.

Had I exited in the first trading session after earnings were published, I would have paid a $3.40 premium to exit. As it is, the price of getting out was $4.12, a significant worsening of the loss. In hindsight, an immediate exit was the best strategy.


HTZ publishes earnings on Tuesday after the closing bell.

I shall use options that trade for the last time 10 days hence, on Aug. 18.

Implied volatility stands at 102%, which is 10.3 times the VIX, a measure of the volatility of the S&P 500 index.

HTZ’s IV stands in the 91st percentile of its annual range and the 88th percentile of its most recent broad movement.

The price used for analysis was $14.73.

Premium: $2.41 Expire OTM  
 HTZ-iron condor ` Odds Delta
Long 20.00 94.6% 8
Break-even 17.41 ~81.2% ~25
Short 15.00 57.8% 51
Puts
Short 15.00 42.4% 49
Break-even 12.41 ~72.1% ~21
Long 10.00 90.9% 6

The premium is 48% of the width of the position’s wings.

The risk/reward ratio is 1.2:1.

Decision for My Account

I have entered an order on HTZ as described above. The stock at the time of entry was priced at $14.65.

By Tim Bovee, Portland, Oregon, Aug. 8, 2017

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

License
Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.

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