Harley-Davidson Shifts Higher After Surprise Profit

Options traders are blasting HOG in response

Deputy Editor
Feb 8, 2022 at 9:59 AM
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Harley-Davidson Inc (NYSE:HOG) stock is revving up today, last seen 9.3% higher to trade at $39.48, after the company announced an unexpected profit for the fourth quarter. The motorcycle giant reported earnings of 14 cents per share, higher than Wall Street's estimated losses of 38 cents per share, on revenue of $816.02 million. The company saw increased demand for its more expensive motorcycles, the reward from a 2020 strategy shift to focus on high-margin bikes after a near two-year sales drop.

In response, Harley-Davidson stock is trading at its highest level since a mid-December surge to nearly $44, and moving back into positive year-to-date territory. HOG is also back above its 160-day moving average for the first time since July. 

A short squeeze could be helping fuel today's rally. Short interest is off by nearly 20% in the two most recent reporting periods, yet the 14.56 million shares sold short still accounts for a healthy 9.5% of HOG's total available float. At the stock's average pace of trading, it would take shorts more than seven days to buy back their bearish bets.

Harley-Davidson stock's normally quiet options pits are buzzing with activity. Already, 4,878 calls and 2,549 puts have been exchanged, which is 15 times the intraday average. Most popular by far is the weekly 2/11 38-strike call, followed by the 40-strike call from the same series.

However, HOG ranks low on the Schaeffer's Volatility Scorecard (SVS), with a score of just five out of 100. In other words, the security has consistently realized lower volatility than its options have priced in, making the stock a potential premium-selling candidate.


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