HOG – Harley-Davidson, Inc. – The motorcycle maker’s shares are up 2.1% as of 11:40 am ET, but earlier surged 3.00% to an intraday high of $28.29. Recovery in Harley’s shares spurred bullish investors to action and inspired increased demand for HOG-calls. Options traders exchanged more than 9.8 calls on the stock for each single put option in action thus far in the trading session. Bulls scooped up approximately 2,800 now in-the-money calls at the September $28 strike for an average premium of $0.28 apiece. Investors long the calls make money as long as Harley-Davidson’s shares exceed the average breakeven price of $28.28 at expiration on Friday. Optimism spread to the October $29 strike where some 1,300 calls were coveted at an average premium of $0.70 a-pop. HOG’s shares must increase another 5.00% in order to surpass the $29.70 average breakeven point faced by October $29 strike call buyers. Another 1,500 call options were picked up at the higher October $30 strike by traders willing to shell out an average premium of $0.43 per contract. These investors stand ready to amass profits should HOG’s shares jump 7.55% over today’s high of $28.29 to rally above the effective breakeven price of $30.43 by October expiration day. Finally, traders doubting the motorcycle company’s shares will rally above $31.00 in the next month shed roughly 1,500 calls at the October $31 strike to pocket an average premium of $0.27 apiece. Call sellers keep the premium received as long as shares fail to rally above $31.00 by October expiration. But, if these are uncovered short call stances, investors could incur losses if HOG’s shares trade above the average breakeven point to the upside at $31.27 by expiration day next month.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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