One stock that I follow closely is Avis Budget Group (symbol CAR). The stock currently trades at 10.91. I bought a lot of the stock when it went below 50 cents at the height of the market crash. It has been very good to me. Right now, there is greater volatility in the stock because of the takeover fight with Hertz. It seems, however, that the fight is over and Avis will not be making any expenditures that could affect its outlook. Nevertheless, the elevated volatility in the options gives opportunities like this one: Buy the stock for 10.91 and write the November 10 calls for $1.60. The stock has to decline by over 9% before you would get less than the maximum profit, and you will make money so long as the stock stays above 9.31 at November expiration. If the stock is taken away on the expiration date at 10 dollars, the annualized return to call is over 40%.
While there is obviously some risk that Avis and the entire market could decline, this is a trade with a great risk reward ration in my opinion.
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