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Hertz traders cautious before earnings

David Russell (david.russell@optionmonster.com)

Hertz Global reports earnings on Monday, and the tone is cautious today.

optionMONSTER's Depth Charge tracking program detected the purchase of 5,200 August 26 puts, most of which priced for $0.90 and $0.95. Volume was more than 12 times previous open interest at the strike, indicating that new positions were initiated.

Puts ensure a minimum selling price for the car-rental stock, in this case $26. They gain value below that level, compensating the investor if he or she owns shares. The contracts can also be used as an alternative to short selling, without the upside risk. (See our Education section)

HTZ is down 2.68 percent to $26.14 in morning trading but is up 60 percent in the last year. It's been pulling back recently after touching an all-time high of $27.75 last week. Results have beaten expectations for at least the last four quarters.

Total option volume is 9 times greater than average so far in today's session, according to Depth Charge. Puts account for almost three-quarters of the total.

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