Andrew Bary

Option trading has surged in Avis Budget Group as investors seek to capitalize on the surging stock of the rental-car company.

Avis shares are down sharply Wednesday after a huge run over the past month. Avis stock is off $168 per share, or 23.5%, to $547 in a wild session that saw it trade at $848 shortly after the opening.

There were 155,000 option contracts traded on Avis stock Tuesday, up from just 500 contracts a month ago when the stock was trading around $100, according to data from Chris Murphy, co-head of derivatives strategy at Susquehanna Financial Group.

Avis was in the top 25 stocks in options volume Tuesday. Investors have gravitated toward the options because of the volatility in the stock, and the puts in particular are popular because of the difficulty and risk of shorting the stock.

Two investors, SRS Investment Management and Pentwater Capital Management, control over 100% of Avis stock through outright stock ownership and total-return swaps.

This has squeezed shorts and prompted short covering that has driven up the stock price until the big break Wednesday. There were about nine million shares sold short on March 31, or more than 25% of the company's 35 million outstanding.

The implied volatility of Avis options is among the highest for any stock now at more than 300%. This means elevated option prices, which makes it harder for those long calls or puts to profit since option premiums are high. Most stock options have implied volatilities below 50% and the options on the S&P 500 have a volatility under 20%. An implied volatility level of 300% implies a daily move in the stock of close to 20%.

The out-of-the-money put option with a strike price of $500 expiring on Friday is up $6 to $30 Wednesday -- not a big move considering the sharp drop in the stock. The in-the-money $600 put expiring Friday is up $34 per contract to $85.

Much of the recent put activity has been in options maturing in a month or so as investors seek to profit from what they saw as an unwinding of the short squeeze and a big decline in the stock -- a move that may have started Wednesday.

Write to Andrew Bary at andrew.bary@barrons.com

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April 22, 2026 15:37 ET (19:37 GMT)

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