Steel Toed Boots Might Be Needed For HTZ
A Call Option Feeding Frenzy in HTZ
Hertz Global Holdings (HTZ) saw an eye-popping surge in call option activity on Friday, October 24, 2025, as traders stampeded into bullish bets ahead of the company’s Nov. 4 earnings release. Total call volume exploded to 8,817 contracts that day – more than five times the number of puts traded (only ~1,762 puts). In other words, the market’s put/call volume ratio plunged to almost 0.2 (and was as low as 0.08 earlier in the week) – a lopsided skew indicating calls were overwhelmingly favored.
This wasn’t just a marginal uptick; call volume ran about 1.4× the typical level, accompanied by a jump in implied volatility to ~120% as traders clamored for upside exposure. The frenzy spanned multiple strikes and expirations, concentrated in short-dated options. For example, weekly $5.50 strike calls expiring on Oct. 24 and Oct. 31 were the most active contracts –racking up nearly 4,500 contracts in combined volume by mid-week. By Friday, those same strikes remained hot tickets, while traders also plowed into slightly out-of-the-money calls further along the curve.
In my opinion, the data suggests that hedge funds and other large traders were employing a coordinated options strategy to hedge their short positions. The heavy short interest implies many funds were shorting HTZ stock in the mid-to-high $6 range, and the concurrent options trades line up with a “short collar” strategy around those shorts. Specifically, it looks like short-sellers were buying $7 calls and selling $5 puts (both expiring in November) to bracket their short stock positions.
Here’s why this strategy makes sense given the October trading activity:
Downside Hedge (Shorting $5 Puts): By selling the $5 strike puts in high volume, a short seller takes in premium up front and also establishes an effective “cover” if the stock collapses. Should HTZ plunge after earnings (below $5), the short seller’s sold puts would be assigned – forcing them to buy the stock at $5. In effect, this caps their short position’s profit at ~$6.50 to $5 (if they shorted around the high-$6s, the maximum gain is realized when covering at $5). In other words, below $5 the short is covered (they’d buy shares at $5 to deliver against both the short stock and the put obligation). The large volume in $5 puts during October is consistent with this tactic of selling puts for income and a predetermined cover pricetipranks.com.
Upside Protection (Buying $7 Calls): By purchasing calls at the $7 strike, short sellers insure against a sharp rise in HTZ’s price. If, for example, an earnings surprise or short squeeze drove the stock above $7, the long call gives the short seller the right to buy shares at $7, capping their loss on the short position beyond that level. The observed heavy call buying at the $7 strike aligns with this need for upside protection. Essentially, those $7 calls function as a safety net if the stock rallies past the short-seller’s entry price.
By combining short stock + short $5 puts + long $7 calls, these funds created a protective collar on their short position. This strategy would allow them to profit if HTZ shares declined into the $5–6 range, while limiting risk on both extremes: the short put limits further profit below $5 (but also generates premium income), and the long call limits losses above $7. Given Hertz’s volatility and the upcoming earnings, this collar strategy appears to be a prudent way for big players to manage risk. The fact that the exact strikes and expiries in question (Nov $5 puts and $7 calls) saw unusual activity lends credence to the idea that hedge funds were implementing this approach.
TL:DR
After reviewing the October 2025 options trading in HTZ, it’s clear there were days of heavy short-oriented activity (e.g. large short sales and put buying/selling) and days of heavy call buying ahead of earnings. The $5 put and $7 call strikes were focal points of this action. In my view, this was likely driven by sophisticated traders (hedge funds/institutions) who were short Hertz’s stock and hedging that bet through options. By shorting in the high-$6 range, selling $5 puts, and buying $7 calls, they effectively took in premium and set up a limited-risk bearish position: if Hertz’s stock plunged after earnings, they’d pocket the short profits (down to $5) and keep the put premium; if the stock instead rallied above $7, their calls would kick in to prevent runaway losses on the short. This interpretation is supported by the extraordinary options volumes and the high short interest from institutional players during the month. In summary, the October options tape for HTZ strongly suggests that hedge funds were actively positioning with a bearish bias but using options to cushion against both a collapse or a spike, exactly as the described $7 call/$5 put strategy would achieve.
Shorts Call an Audible – Hedging Their Bets
The ironic twist here is that much of this call buying may have come from the same crowd that’s been bearish on Hertz. HTZ has been a popular short: roughly 54.7 million shares are sold short – a hefty 43% of the float as of mid-October. With that kind of high short interest, Hertz is a coiled spring. Short sellers know that any upside surprise on Nov. 4 could send the stock ripping higher, inflicting serious pain on anyone caught short unhedged. Apparently, some of these shorts have decided to buy insurance – in the form of call options. After months of confidently betting against Hertz, suddenly they’re scrambling to grab calls like patrons fighting for umbrellas in a downpour. The rationale? If Hertz’s earnings or guidance spark a rally, those call options would limit their losses (the calls pay off as the stock rises, offsetting some of the damage to short positions). In Wall Street parlance, it looks a lot like shorts “buying to cover” – not their shares, but calls – to hedge against an explosive move higher.
The tone of Friday’s options tape had a whiff of panic buying from late-to-the-party bulls and chastened bears alike. Implied volatility pumping above 120% suggests traders were paying up for upside protection, and the sheer call volume dominance hints that even pessimists felt the need to get long gamma (however reluctantly). It’s almost comical: the very investors who doubted Hertz’s prospects are now paying top dollar for call options – a sudden conversion from blaspheming the stock to praying for a hedge. As one might say, if you can’t beat ’em, join ’em – or in this case, buy calls on ’em.
Biting Commentary: Newfound Faith in Hertz’s Upside?
For a savvy institutional observer, this dramatic swing in positioning is hard to ignore (or not chuckle at). Hertz’s bears appear to have developed a late-breaking case of FOMO or CYA – fear of missing out or perhaps cover your a* (assets)* – now snapping up calls after spending weeks or months shorting the stock. The sudden demand from those who previously shunned upside exposure has all the markings of a hedging scramble. It’s a vivid reminder that market sentiment can flip on a dime when risk management comes knocking.
Whether this burst of call buying proves prescient or merely an expensive bout of paranoia will be revealed shortly. If Hertz’s earnings disappoint, these newly minted call owners (including the sheepish shorts) will see their contracts expire worthless, and we’ll hear a collective groan about wasted premium. But if Hertz delivers good news or any positive surprise, watch out – those same calls could fuel a virtuous cycle of short covering and further buying. In that scenario, the shorts who hedged with calls might be spared the worst of the pain, while unhedged shorts learn a brutal lesson.
Either way, their B.S runs upstream on the rest of us: after all the trash-talking of Hertz’s fundamentals, the short side is now long calls to protect against a runaway train. I’m guessing and calling them out. The sudden change of heart among these skeptics speaks volumes. It seems nothing concentrates the mind quite like the prospect of a short squeeze – and on Friday, Hertz’s short sellers voted with their feet and their wallets, begrudgingly positioning for upside. As the saying goes, “the market always finds a way to hurt the most people” – and in Hertz’s case, it appears some of the hurt shorts would rather buy a little upside hope than risk being left with nothing but their convictions. In the high-stakes game of earnings roulette, even the bears are anteing up calls – a sharp reminder that on Wall Street, irony and pain often go hand in hand.
Man I hope I’m right AGAIN. I’ve kicked the short players ass big for gains of 100-900% gains the last year. Lets hope to add them to NBIS, UPST OPEN AFRM and WULF. If this comes through, we’ll all need steel-toed boots — don’t want to break a toe while kicking their asses.
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