NEW DIRECTIONAL PUT PLAYS
Dollar Thrifty Auto Group - DTG - close 44.46 change -0.27 stop 46.40
Dollar Thrifty Automotive Group, Inc. (DTG) is engaged in the business of the daily rental of vehicles to business and leisure customers through company-owned stores. The Company also sells vehicle rental franchises worldwide and provides sales and marketing, reservations, data processing systems, insurance and other services to franchisees. The Company has two additional subsidiaries, Rental Car Finance Corp. (RCFC) and Dollar Thrifty Funding Corp., which provide vehicle financing to the Company. Dollar Rent A Car, Inc., the Dollar brand and DTG Operations operating under the Dollar brand are individually and collectively referred to as Dollar. Thrifty, Inc., Thrifty Rent-A-Car System, Inc., Thrifty Car Sales, the Thrifty brand and DTG Operations operating under the Thrifty brand are individually and collectively referred to as Thrifty.
Target(s): 41.65, 40.05, 39.35
Key Support/Resistance Areas: 45.50, 43.50, 41.50, 39.00,
Time Frame: 1 week
Why We Like It:
DTG is forming a descending triangle on the daily charts. If DTG breaks support there is a gap to be filled all the way down to $39.35. The stock has support at its 50-day SMA and a trend line that began on 2/5, but I believe these will be broken on any further market weakness. So the question is whether or not to wait for the base of the triangle to break near $43.15 or initiate short positions at current levels. The stock made a double top with today's highs and the highs from 6/14 so it is a compelling area to initiate short positions at current levels. This also gives us a good reference point to place a relatively tight stop $46.40 which is above the double top and all of the highs since 6/4. More conservative traders may want to wait to initiate short positions if DTG trades below $43.15 as this should get things moving to the downside in earnest. Considering today's price action in the overall market, we will officially be entering short positions at current levels and playing the more aggressive route with a tight stop.
Suggested Position: Buy July $45.00 PUTS, current ask $2.70
Annotated weekly chart:
Entry on June xx
Earnings 7/28/2010 (unconfirmed)
Average Daily Volume: 1 million
Listed on June 21, 2010