New Options Trading Sparks Investor Interest in HOG Stock

Investors are eyeing new options for Harley-Davidson (HOG). The analysis reveals a 5.86% potential return on a put option and 8.89% on a covered call option, indicating positive sentiment surrounding the stock.

Date: 16-01-2025

AI Rating: 7

Options Trading Insights
Recent trading activity in Harley-Davidson Inc (HOG) has introduced new options contracts, particularly a put and call option that are garnering attention. The put option at a $29.00 strike price presents an opportunity with a premium of $1.70, which effectively reduces the cost of shares to $27.30 for interested buyers. This scenario provides a feasible alternative for investors looking to enter the stock at a lower price, enhancing their positions.

The put option is currently out-of-the-money by approximately 1%, with a notable probability of 55% that it may expire worthless. Should this occur, the premium equates to a 5.86% return on the cash commitment, equivalent to a strong 33.45% annualized rate. This level of return indicates a favorable sentiment for investors considering this strategy.

Covered Call Potential
On the call side, the $31.00 strike priced at a current bid of 85 cents offers an alternative. If an investor buys HOG stock at $29.25 and sells the covered call, they are positioning themselves to realize an 8.89% return upon the stock being called away. However, if the call expires worthless, the investor secures both their shares and the premium, with a potential 2.91% yield boost or 16.58% annualized return. Given that the call option is out-of-the-money by 6%, there’s a 62% chance it could potentially expire worthless, providing further reassurance to investors.

The contrasts in implied volatility between the put (41%) and call (37%) options, alongside the actual trailing twelve-month volatility of 37%, reflects the market’s outlook on HOG’s performance, balancing risk and reward factors very thoughtfully.

Stocks: HOG