Harley-Davidson Stock Hindered by Quarterly Miss

The options pits are seeing a renewed focus on puts today

Deputy Editor
Jul 28, 2020 at 10:45 AM
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The shares of Harley-Davidson Inc (NYSE:HOG) are down 10% at $26.34 at last check -- one of the worst stocks on the New York Stock Exchange (NYSE) today -- after the motorcycle giant's second-quarter report came in well below estimates. The company reported losses of 60 cents per share -- far lower than the expected profits of 4 cents per share -- alongside a revenue miss. Though coronavirus has weighed on Harley-Davidson this quarter, sales have picked up since April, and the company is working on its continuous plan to appeal more to a younger generation of buyers. 

Today's fall has Harley-Davidson stock on track for its steepest one-day decline since April 30. It has the shares dropping off from their support at the 10-day moving average, but their 40-day trendline -- an area that contained a late-June pullback -- has stepped up as a floor today. Year-to-date though, the equity is down 29.4%. 

Coming into today's earnings session, seven out of 15 analysts in coverage sport a "buy" or better rating, while the remaining eight are at a "hold" with no sells or worse in sight. Meanwhile, the 12-month consensus target price, which was in line with yesterday's close, is now a 10.4% premium to current levels. In other words, the equity is at risk for a shift in analyst sentiment.

In the past 10 weeks, calls have been bought at the highest rate in the last 12 months. HOG's 50-day call/put volume ratio of 1.56 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 100% of other readings from the past year. 

Today, however, the options pits are seeing a 180-degree switch. Put volume is running at 11 times what is typically seen already today, with 3,247 puts across the tape so far compared to 2,368 calls. Most popular is the weekly 7/31 26-strike put, where new positions are opening. This means that traders are betting on more downside for HOG by the end of the week. 


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