Why Bulls Are Turning Back to Avis

 |  Includes: CAR, DTG, HTZ
by: optionMONSTER

By David Russell

The bulls are riding with Avis Budget Group (NASDAQ:CAR) again as the company recovers from a steep correction.
CAR Chart

optionMONSTER's Heat Seeker tracking system detected the purchase of more than 5,600 January 12.50 calls for $1.15 and $1.20 against open interest of 1,632 contracts. The trades appeared about the same time that large blocks of stock were purchased, indicating that an institutional investor is building a position in the name.

CAR is down 1.54% to $10.54 in morning trading. The car rental company has been fighting its way higher in recent weeks after losing about half its value between late April and early July.

The entire industry has been benefiting from lower costs and a rebound in business travel, but CAR has struggled as investors worry about its attempted purchase of Dollar Thrifty Group (NYSE:DTG). Arch-rival Hertz (NYSE:HTZ) is also attempting to buy DTG.

CAR has been trading around its current price level for the last year. Today's call buying suggests that investors apparently think that it's ready to start climbing again. The shares must rise at least 29% by expiration for the contracts to turn a profit.

The trade pushed total options volume in the stock to triple the daily average, with calls accounting for a bullish 97% of activity.

Disclosure: No positions