Shares of Dollar Thrifty Automotive continue to slip, but one trader is betting that the stock will stay range-bound.
DTG is down 0.8 percent to $73.55 in late morning trading. Shares of the car-rental company had been holding right at $87 on a buyout offer but have been in free-fall for the last two weeks, dropping further after yesterday's earnings announcement.
More than 24,000 DTG options have already changed hands this morning, more than 10 times their daily average of 2,300 in the last month. Topping that action is a December combination trade, according to optionMONSTER's systems.
The trade involved 3,000 each of the December 70 puts and 75 calls that went for $3 and $4 respectively. Given the price action, it appears that both sides of the trade were sold in a short strangle.
The short-volatility strategy takes in $7 credit and can potentially profit with the stock anywhere between $63 and $82 at expiration. The trader is effectively long stock if it is below $70 and effectively short it above $75.
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