Happy Good Friday to Barchart readers everywhere. 

The shortened week saw the S&P 500, Dow Jones Industrials, and Nasdaq 100 lose 1.5%, 2.7%, and 2,3%, respectively. All three indices are down in 2025. 

While the U.S. weekly initial unemployment claims fell to a 2-month low of 215,000, the markets are trending lower, due to the global trade uncertainty caused by U.S. tariffs.

“The U.S. is exporting a lot of high-value services: software, Hollywood, banking — that’s where the future lies,” said Jayant Menon, a senior fellow at ISEAS-Yusof Ishak Institute in Singapore who previously served as lead economist at the Asian Development Bank. “[Trump] is risking economic growth, he is risking access to technology that comes through trade and investment,” the Los Angeles Times reported the economist’s April 17 comments.

With earnings season underway, and 12% of S&P 500 companies reporting, 71% beat the Wall Street EPS estimate according to FactSet, 600 basis points lower than the five-year average, and 400 basis points less than the 10-year average. 

In Thursday trading, 60% of the 1,414 unusually active options were calls, indicating that investors are nibbling on stocks now, hoping to use leverage to benefit from a possible rebound in the weeks ahead. 

Due to Bill Ackman’s sudden interest in Hertz Global Holdings (HTZ), HTZ stock had nine unusually active options (6 puts/3 calls) yesterday.

Here are three possible strategies to take advantage of the billionaire’s significant stake in the rental car giant. 

Have an excellent Easter. 

Why Ackman Likes Hertz

Bill Ackman revealed on Wednesday that his investment firm, Pershing Square Capital Management, had taken a 19.8% stake in Hertz. Ackman’s firm began accumulating a position late in 2024. 

Pershing Square is now the firm’s second-largest shareholder behind CK Amarillo LP, a partnership between two New York investment firms--Certares and Knighthead Capital Management, which own approximately 59% of the company. 

His post on X laid out the rationale for Pershing taking its position in the rental car company. 

The three points that resonate with me:

• Hertz owns over 500,000 vehicles valued at $12 billion. As used car prices rise due to auto tariffs, the company’s fleet gets more valuable. A 10% increase in these prices boosts the asset value of its vehicles by $1.2 billion.
• CEO Gil West’s turnaround at Hertz is gaining traction. With Enterprise, Hertz, and Avis controlling 95% of the rental car market, an improvement in Hertz’s profit margin to somewhere near Enterprise-like levels (20%) would boost HTZ’s share price considerably.
• Ackman suggests that if these management and industry improvements boost Hertz’s adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to $2 billion by 2029, its stock would be conservatively valued at $30, or 7.5x adjusted EBITDA. 

In addition, Ackman suggested an AV (autonomous vehicle) partnership with Uber Technologies to boost Uber’s margins while better utilizing Hertz’s massive global fleet. 

It’s a compelling argument. I can see why Hertz’s stock doubled on the news. As a result, it’s out of penny-stock hell. 

Should You Follow Ackman Into Hertz?

The last time I wrote about Hertz on Barchart was last September.

At the time, it had entered Barchart’s Bottom 100 Stocks to Buy. I wondered if it was ready for a second visit to Chapter 11 in less than five years or if deep value investors were on something.  

While I concluded by stating that “I would not touch Hertz with a 10-foot pole,” I also suggested aggressive investors make a contrarian bet on the stock with a March 21/2025 $5 call. 

With a $0.50 ask price, or about 14% of its share price at the time, you could double your money with a 35% move over the next six months. It did that by late November, trading between $3 and $5 until Wednesday’s big 56% jump. 

Yesterday's ask price for a six-month $5 call (Oct. 17 expiry) was $4.20, more than 8x the six-month call last September. 

While the price to play has gotten considerably higher, I believe that aggressive investors aren’t too late to the party. 

Yesterday’s nine unusually active options provide some possible strategies. Here are three to mull over Easter weekend. 

The 9 Unusually Active Options in Question

The strike prices ranged from $3 to $30, while the DTEs (days to expiration) ranged from eight to 639. Two had Vol/OI (open interest) ratios above 10%. 

Options Strategy #1

Ackman suggested HTZ stock could hit $30 by 2029. That makes the $30 call an obvious choice. It expires in 275 days. The $0.35 ask price is reasonable at just 4.2%. 

While it almost certainly isn’t going to hit $30 by January--the profit probability is just 5.6%--you could double your money by selling the call before expiration if it appreciates by $2.70 (21%) in the next nine months.  

Every time you sell for a profit, you buy another $30 call for around 5% of the share price until it reaches $30, or the investment thesis collapses and Bill Ackman exits his position. 

Options Strategy # 2

The Jan. 15/2027 $5.50 call has the highest DTE at 639, slightly over 21 months. If the auto tariffs remain until then, Ackman’s value proposition vis-à-vis used cars will gain traction. 

 

While the net debit of $540 is 66% of its $8.24 closing share price from Thursday, the profit probability is considerably higher at 44.58%. 

Based on the delta of 0.83491, you can double your money by selling before expiration if the shares appreciate $6.47 (79%). However, because the breakeven is only $10.90, it only needs to appreciate by 32.3% before you’re making money. 

Options Strategy # 3

The final strategy is a bull put spread. This is when you expect HTZ stock to increase in value. In this example, you sell a put option and then buy another put at a lower strike price. 

Using the unusually active Jan. 16/2026 $4.50 put from Thursday, selling the $7.50 put, while also buying the $4.50 put, the maximum profit is 87.50% with a reasonable risk/reward of 1.14 to 1, and a loss probability of 38.2%. 

You can make money on this trade if the Hertz share price exceeds $6.10 at its expiration in January. Your maximum profit (net credit) on this trade is $1.40 [$2.85 bid price - $1.45 ask price], while your maximum loss is $1.60 [$7.50 strike - $4.50 strike - $1.40 net credit].    

It’s a very low-risk way to generate additional income for bullish Hertz investors. 

There are more strategies. I’ll save them for another day. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.