A Good Rental Stock – Hertz

• Posted by Greg Harmon
• on May 7th, 2014

Hertz Global, $HTZ, rescheduled its earnings Wednesday morning. It started higher but then sold off quickly before a rebound. That action created a bullish engulfing day Wednesday to add to the previous price action, and closed a gap higher. The chart below was presented to subscribers ahead of earnings. It shows the price action creating a Shark harmonic and retracing 50% before building into a Deep Crab, with a PRZ at 33. I’ve added the resistance zone on deep red now to show how close it is to a break out after the report. Also notice how the RSI, MACD, SMA’s and Acc/Dist are all in a slow trend higher. This may be ready to trend higher again. There are a couple of ways to trade this. You could use the 20 or 50 day SMA as a stop and enter now. Or you could

look for a break of the resistance zone as a trigger to enter. But as an options trader there are even more ways. A simple one is to just buy the June 29 Calls (offered at $1.25 as I write) for a defined risk trade. Or a bit more complex a June 26/29 bullish Risk Reversal (80 cents) gives protection to the bottom of the consolidation zone and lowers the cost of the trade. And for the trader looking for even more leverage a September 29/33 Call Spread Risk Reversal selling the September 26 Put is nearly free with the same downside risk. The company postponed earnings Wednesday to finalize some number and will reschedule soon.

Don’t understand the options strategies? They are all explained in my book or you can just ask me.

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