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Option Clips: Coach Inc, Harley-Davidson Inc, and Red Hat Inc

Reviewing notable options activity on Coach Inc, Harley-Davidson Inc, and Red Hat Inc

by 6/19/2014 2:41 PM
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Three names seeing notable option activity today are accessories designer Coach Inc (NYSE:COH), motorcycle legend Harley-Davidson Inc (NYSE:HOG), and Linux pioneer Red Hat Inc (NYSE:RHT). Here's a look at how today's option traders have been placing their bets on these three names.

  • Coach Inc (NYSE:COH) has dropped nearly 10% to trade at $35.35 -- and earlier hit a multi-year low of $35 -- after projecting at its annual investor and analyst day today a double-digit revenue decline for the current fiscal year, and announcing it will close 70 stores. As such, the stock has landed on the short-sale restricted list, prompting bearish traders to rush to the options pits. Specifically, COH puts are changing hands at nine time times the typical intraday pace. Digging deeper, it appears one option bear has initiated a long put spread, by buying to open 2,000 in-the-money August 40 puts, and selling to open an identical number of out-of-the-money (OOTM) August 35 puts.

  • Harley-Davidson Inc (NYSE:HOG) is trending higher following the reveal of its new electric superbike, LiveWire. At last check, the shares were 0.7% higher at $70.39. Calls are being exchanged at twice the expected intraday rate, and the stock's 30-day at-the-money (ATM) implied volatility (IV) is 11.2% higher at 20.8%, signaling increased demand for short-term contracts. Meanwhile, HOG's August 75 call is the most active strike, as buyers are scooping up the OOTM contracts in order to gamble on continued gains during the next two months. The equity hasn't traded north of $75 since November 2006, when it hit a record high of $75.87.

  • Finally, Red Hat Inc (NYSE:RHT) has advanced 2.8% to trade at $54.66, after topping the Street's consensus bottom-line forecast for the fiscal first quarter, and announcing the planned acquisition of cloud computing name eNovance. Not surprisingly, intraday options volume has spiked to six times the norm. Seeing significant activity is RHT's OOTM July 52.50 put, where a 3,000-contract block crossed the tape at the ask price moments after the opening bell. However, open interest covers volume, so it's unclear whether the contracts were bought to open or close. Either way, now is a good time to pick up short-term RHT contracts, as the stock's 30-day ATM IV hit a 12-month low earlier.


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