Closed HTZ Covered Call with a -$200 Loss

On May 26, 2020, our market order of selling all our HTZ shares got filled at price $0.49

Long story short, we bought 100 shares of HTZ just a couple of days ago, paying $3.17 per share and simultaneously sold 1 covered call contract for what we got a very hefty premium of $0.7 per share. See: Covered Call on HTZ - Potential income return 32.49% in 11 days

This was very speculative trade, and I must admit I placed it based only on technicals, not checking out news, here is what I said:

HTZ seems is facing bankruptcy threats, and I must admit this is one of the most speculative trades I've done lately - there is a huge chance of the company going bankrupt - will it happen in the next 11 days? Not so sure. Could share price drop from $3.17 down to $2 or $1 in the next 11 days? You bet

Unfortunately the filling for bankruptcy come faster than expected, and it was decided to close this trade at whatever cost. See: Hertz (HTZ) Filling for Bankruptcy / Chapter 11 - Our potential Max loss $247

The good news - we avoided our max loss by a mere $47. I would say this is great. Every recovered dollar is worth it.

HTZ closing trade

  • Running Total  3 Trades since May 18, 2020
  • Trade P/L -$200, with capital at risk $317

Now, this happens, not every trade with covered calls is a winning trade. Bankruptcy happens. Our investment could be avoided if more careful studies were performed on Hertz stock.