The borrow market for HTZ has snapped. Cost to borrow has tripled in a week. Options traders are the most bullish they've been in a year. The stock, meanwhile, has lost nearly half its value in a month.
Something has broken in the normal relationship between these signals — and the divergence is now acute.
The previous note flagged a puzzle: availability was near zero, yet borrow costs remained subdued. That divergence has now resolved — violently.
Cost to borrow hit 3.53% on June 25. That is up 215% in one week. For most of June, CTB had been hovering between 1.1% and 1.2%. The three-fold jump in a single week signals that lenders have finally repriced the scarcity that was already visible in availability data.
Availability has swung sharply. It touched a near-complete freeze at 0.29% on June 24 — effectively zero, every share in the pool lent out. It has since recovered slightly to 5.94%, but that remains extremely tight. For context, the 52-week low on availability was 0.03%. HTZ has now visited near that floor twice in a month.
Short interest stands at 20% of free float, up 8.3% in one week and 15.2% over the past month. That is a meaningful and accelerating build.
Against this backdrop, the put-call ratio has collapsed to 1.55 — a 52-week low. The 20-day mean PCR sits at 2.12. The current reading is 2.6 standard deviations below that mean. That is an extreme positioning shift.
Options traders are adding calls — or shedding puts — at the fastest pace in over a year. This happened as the stock fell 47% over the past week. The PCR has dropped in lockstep with the price: from 2.20 in mid-June to 1.79, then 1.73, then 1.55.
One interpretation: traders see the stock as oversold and are positioning for a bounce. Another: option market makers are repricing protection as the short side becomes structurally harder to press.
The insider picture adds a bearish counterweight. The CFO sold $724k of stock on June 17, when shares were at $4.83. The COO sold $722k on June 12 at $5.13. The CEO sold $1.3m in April at $5.18. Every significant insider trade in the past 90 days has been a sale, totaling nearly $3m net.
Knighthead Capital Management holds 57.5% of shares. Their position is unchanged as of the last filing. Their view of this situation carries more weight than almost any other single datapoint.
See the live data behind this article on ORTEX.
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