Call Volume Suddenly Pops On Harley-Davidson Inc (HOG)

Harley-Davidson Inc (NYSE:HOG) option bulls are betting on the stock hitting $50 by April options expiration

by Josh Selway

Published on Mar 7, 2016 at 12:25 PM
Updated on Jun 24, 2020 at 10:16 AM

Options volume has exploded on motorcycle maven Harley-Davidson Inc (NYSE:HOG) today. By the numbers, over 13,000 calls have crossed at the April 50 strike. The options were bought to open by way of several blocks traded across multiple exchanges, as speculators bet on HOG topping $50 by Friday, April 15, when back-month options expire. 

The action at this out-of-the-money strike has HOG call volume running at 15 times the average intraday pace, with overall option volume on pace to finish in the 99th percentile of its annual range. Option buyers may be taking advantage of relatively low premiums on the stock's near-term options. Specifically, HOG's Schaeffer's Volatility Index (SVI) of 28% lands in just the 33rd percentile of its annual range. 

Making today's call surge that much more notable is the fact that it marks a sudden change in sentiment among the stock's speculators. For instance, nearly two HOG puts have been bought to open for every call during the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The resultant put/call volume ratio of 1.94 is just 7 percentage points from an annual high. 

Bears appear to be hitting the exits on another front, too. For instance, short interest dropped by over 8% during the last reporting period, though it still would take short sellers almost seven sessions to buy back their bets, at average daily volumes. 

At last check, Harley-Davidson Inc (NYSE:HOG) was up 0.9% at $47.18 -- on track to notch its highest close of the year. The shares have now added 30% since their four-year low of $36.36 on Jan. 28. 

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