Looks like another boring stable covered call...Budget Avis (CAR)

C

Cabin111

I've held this through the pandemic...Not great. It is up over 350% from it's low. People are wondering if Hertz will be around a year from now. You go to the airport counter and you have your choice of Budget, Avis, or a lesser known name (you can go with Hertz, but do you want to contract with someone who is in bankruptcy). My guess, just for less of a hassle, you go with a known name.

As I write this you can pick up CAR for $24.22 I look at the Jan 22 $25. "sell to open" is at bid $9.80 ask $10.90.

It looks good to me...Yeah, we know Uber and Lyft is taking market share. But others will want to come and go as they please.

So please feel free to shoot down my idea of buying CAR and doing a Jan 22 covered call on the $25...
 
The spread is over a dollar wide.

That being said I don't even think people pick rental services. My experiences at major airports (LAX and JFK in particular) people are either ubering or lyfting. Of my experiences getting a rental car I've never really even thought about who I was getting it from. What's my risk getting a car from Hertz? They go bankrupt tomorrow and their renter insurance still covers me. It's all reinsured ad infinitum anyway. I doubt Hertz even has any exposure. I'd be more concerned with who has the model of car I want.

Other than that I can't see anything wrong. Are you using covereds to reduce your cost basis? You'd be better off with a short put if not.
 
gaussian said:
The spread is over a dollar wide.

That being said I don't even think people pick rental services. My experiences at major airports (LAX and JFK in particular) people are either ubering or lyfting. Of my experiences getting a rental car I've never really even thought about who I was getting it from. What's my risk getting a car from Hertz? They go bankrupt tomorrow and their renter insurance still covers me. It's all reinsured ad infinitum anyway. I doubt Hertz even has any exposure. I'd be more concerned with who has the model of car I want.

Other than that I can't see anything wrong. Are you using covereds to reduce your cost basis? You'd be better off with a short put if not.
More...
I wonder... if you have an active rental and the company files for bankruptcy, do you get to keep the car?
 
gaussian said:
The spread is over a dollar wide.

That being said I don't even think people pick rental services. My experiences at major airports (LAX and JFK in particular) people are either ubering or lyfting. Of my experiences getting a rental car I've never really even thought about who I was getting it from. What's my risk getting a car from Hertz? They go bankrupt tomorrow and their renter insurance still covers me. It's all reinsured ad infinitum anyway. I doubt Hertz even has any exposure. I'd be more concerned with who has the model of car I want.

Other than that I can't see anything wrong. Are you using covereds to reduce your cost basis? You'd be better off with a short put if not.
More...

Yeah, lower cost basis. Think of a retiree who sold their business, paid their taxes, and has a lot of cash on hand. CDs...?? No!! China...?? No! Ford, GM, GE...?? No!! So I try and be creative with boring stable stocks. Just how I do things...
 
kmiklas said:
I wonder... if you have an active rental and the company files for bankruptcy, do you get to keep the car?
More...

Of course not - your agreement says that the car is their asset. You should be asking, do you get your deposit back, as it might be an unsecured liability.
 
newwurldmn said:
Of course not - your agreement says that the car is their asset. You should be asking, do you get your deposit back, as it might be an unsecured liability.
More...
My guess -
the physical car - yes, while the debt of paying for it, would become an asset of another company/institution.

Thinking rationally, why even to bother of taking back a material asset, then trying to sell that and etc, while you can offer the rights of the debt/loan.
(specially when a client has a high credit score, not some strip dancers of 2008 with triple A rating)

At least they are doing it like this when - banks go bust ?
Someone else is taking care of the housing loans, while the material asset is left for an original owner (client)

@Cabin111 - 350% , beautiful, congratz man.
 
Cabin111 said:
I've held this through the pandemic...Not great. It is up over 350% from it's low. People are wondering if Hertz will be around a year from now. You go to the airport counter and you have your choice of Budget, Avis, or a lesser known name (you can go with Hertz, but do you want to contract with someone who is in bankruptcy). My guess, just for less of a hassle, you go with a known name.

As I write this you can pick up CAR for $24.22 I look at the Jan 22 $25. "sell to open" is at bid $9.80 ask $10.90.

It looks good to me...Yeah, we know Uber and Lyft is taking market share. But others will want to come and go as they please.

So please feel free to shoot down my idea of buying CAR and doing a Jan 22 covered call on the $25...
More...
Its a great idea, but its a suckers play.
I'm not going to do it, but pencil me in on the record here as calling it a short up here at $25 and change. Their balance sheet looks horrible.

And @Overnight and @newurldmn... pretty sure Kieth was making a joke. :banghead:

Newurld... did you buy any $work in the low $20's like I said? They have earnings a week from today I think. $39 now.
 
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