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Why Hertz Calls On A Early Thursday Afternoon Don't Work

First the chart. On paper it looks like this chart could rebound. Here is one series of it's "in-the-money" Calls. Here are three reasons why this situation is to dangerous to play. 1) There is a Avis Budget Group Inc. implosion happening today. A really big one. Read my previous blog. That's not directly related to this company but it makes the sector a bad space to be in. 2) The "bid-and-ask" spread is to far apart which helps to give the market makers some extra insurance. That plus the volume of trading is very light which also seems to give the house an advantage. Look Walmart.The spread is about the same but you can split the middle without affecting the "bids-and-asks" and the volumes are so much better. I like trading in that kind of space better. 3) Hertz is not the kind of company which comes out with daily or weekly updates. Contrast this to the stock Ford which seems to have good and bad news coming out every other day. With Ford so...
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Toyota

Very few option contracts trade on Toyota. I have wondered why and offer one potential explanation. It's listed on multiple exchanges around the world and "option makers" in North America are basically just following the action. If the markets open stronger in North America that means Toyota traded stronger overnight on markets overseas. Secondly, the Calls and Puts trade in incriments of five dollars.There are for example 135 Calls, 140 Calls, 145 Calls. Having a five dollar spread wipes out the incentive try to daytrade option series which are soon to expire. If the stock moves from 142 to 143 the "bids and asks" on a 140 series of Calls might hardly change. It's not like trading the stock like Boeing where you can get in and out with option series set up in increments of $2.50 . Here is it's one month charts. The company now has a new C.E.O who is getting criticized for not moving to go electric quickly enough.
What I am now about to show you might discredit some of my above points. It's a five day chart on Toyota and look how all the action seems to happen on the opening. Why? It's the effect of overnight trading on other markets. Our North American trading follows Toyota's overseas market trading.
Now back to my point of how contracts trade. A volume of three and twelve contracts in the 140 Calls and Puts series that expire soon. Look at how wide apart the "bids and asks" are and how low the outstanding number of open contracts are. It's crazy.
Toyota is a great company. It's just not one that attracts option players.

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