Profit from this short-term bounce

This week has given investors who are net long the market a 20% relief rally which we don't believe will last long. The $2T government stimulus package is fully priced into the market and it will not curb the spread of the Coronavirus or help every business that is hurting from the drop in consumer and business activity around the world. There is much more work to be done to reach the bad-news peak, and our view is that we're not close to being there yet. Community isolation and locking down citizens is having a major effect on businesses and how people are managing their days. There are many certainties among the short-term new normal, one of them is that people do not need cars as much as they did before, and the option of ride-sharing is much more attractive if you're only going to leave your home one or two times per week.

Shares of Autonation (AN) peaked at $53 in late 2019, and bottomed at $20.59 last week before they rallied to $30 today, which is a 50% pop in a week. We believe these shares have further to fall as optimism of the country going back to normal fades in the coming days.

We're buying the May $27 Puts on AN for $2.15, and have 49 days until expiration. Let's all hope that within the next 30 days we're able to get the spread of this pandemic under control across the world and that things can start returning back to normal. We plan to stay in this trade for a few weeks at the most and on any major drop in the stock we plan to exit this trade.