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Harley-Davidson Stock Edges Higher on FAANG Deal, Trade Optimism

Premiums are relatively muted on short-term HOG options right now

Managing Editor
Oct 1, 2018 at 12:25 PM
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Harley-Davidson Inc (NYSE:HOG) stock is 1% higher at $45.76, at last check, with help from the U.S.-Canada trade agreement. Harley-Davidson is also one of the newest FAANG partners, after scoring a deal to sell its clothing brand on Amazon's (AMZN) website. 

From a broader perspective, HOG has struggled on the charts since hitting an annual high of $56.50 on Jan. 29. The motorcycle stock has made multiple breakout attempts since its early May lows, but success had been capped at the $46 level. Interestingly, this ceiling also coincides with a 38.2% Fibonacci retracement of the stock's sharp decline from its January peak to the aforementioned lows, and also represents a roughly 10% year-to-date decline. 

Daily Chart of HOG with Fib Levels

Switching gears, short interest on HOG fell nearly 16% during the past two reporting periods, but still represents a healthy 8% of the stock's total available float. With 13.44 million shares still sold short, it would take shorts nearly eight sessions to buy back their bearish bets, at the equity's average pace of trading.

Meanwhile, analyst sentiment has been unsurprisingly pessimistic toward HOG, with 10 of 14 covering firms sporting tepid "hold" recommendations. What's more, the stock's average 12-month price target of $47.58 comes in just above breakeven to current trading levels. 

Lastly, now may be an opportune time to speculate Harley-Davidson stock's short-term trajectory using. This is per HOG's Schaeffer's Volatility Index (SVI) of 21%, which ranks in the low 2nd percentile of its annual range. In other words, premiums are relatively muted on short-term options contracts for the motorcycle stock.

 

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