Hertz corporate bonds are trading at 39 cents on the dollar so the equity is 99%+ to be worth 0. The reason the equity is trading above 0 is that there’s a borrow fee so to short the shares you have to pay a borrow fee. Also there’s legal implications of being short the shares throughout the bankruptcy process which might reduce the liquidity of your position or ability to get out.
It seems a lot of retail traders bought Hertz shares without understanding that they are going to end up worth nothing. Probably there should be some regulations added to prevent retail traders from making stupid investment decisions like this. Was similar when they bought oil futures close to $0 and then oil futures went negative and they got crushed.
Hertz corporate bonds are trading at 39 cents on the dollar so the equity is 99%+ to be worth 0. The reason the equity is trading above 0 is that there’s a borrow fee so to short the shares you have to pay a borrow fee. Also there’s legal implications of being short the shares throughout the bankruptcy process which might reduce the liquidity of your position or ability to get out.
It seems a lot of retail traders bought Hertz shares without understanding that they are going to end up worth nothing. Probably there should be some regulations added to prevent retail traders from making stupid investment decisions like this. Was similar when they bought oil futures close to $0 and then oil futures went negative and they got crushed.