One investor is turning time into money with Dollar Thrifty Automotive.
optionMONSTER's tracking systems detected the sale of 7,650 October 75 calls for $8.25 and the purchase of an equal number of June 75 calls for $5.25. Volume was below open interest in the June options but not the October contracts, which indicates that an existing short position was rolled forward in time.
DTG fell 1.03 percent to $79.17 yesterday, so those calls were in the money .
The investor probably owns shares in the car-rental stock and is using the options to earn income while holding the long position. He or she has no risk of loss as long as it remains above $75, though the trade will not profit from any upside in the share price.
Adjusting the position paid them an additional $3 of income and kept them in the trade for an additional four months. The strategy effectively lets them convert the time premium in the options into an income trade that's more similar to owning bonds than equity.
It also makes sense because DTG's implied volatility of 37 percent exceeds its 28 percent historical volatility , which suggests the calls are pricing in a bigger move than the stock normally makes. (See our Education section)
Overall option volume was quadruple the daily average in the session.
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