‘CAR’ crash: Avis Budget stock plunge reminding some on Wall Street of GameStop

Shares of Avis Budget Group, ticker ‘CAR,’ soared from under $100 last month to a record high near $850 in early trading Wednesday before a sharp U-turn lower intraday. The stock closed down 38% and was down another 6% in premarket trading Thursday. The shares were last trading around $417 a share.

Options volume was surging with over 200,000 contracts trading Wednesday and implied volatility of 235%, compared to 20% in the S&P 500. The volatility is so high that there was market speculation that brokers were changing margin requirements to trade the stock.

My sources at Charles Schwab said margin requirements did change on April 9, but they did not increase them on Tuesday. However, traders with concentrated portfolio positions in CAR are now required to post 100% margin, meaning trading has to be done entirely in cash.

The saga is reminiscent of GameStop five years ago, when wild swings forced many broker dealers to charge more to trade it — and in some cases — actually restricted trading the the stock.

In the last two days, Avis has traded over 10 million shares. There are only 36 million outstanding shares and much less than that available for trading because of control by two shareholders — Pentwater Capital Management and SRS Investment Management.