Is Harley Davidson Riding Low?

By Adam Warner Oct 01, 2009 8:40 am
Given the ugly picture, it's not surprising investors want some downside.
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Some options action in Harley-Davidson (HOG) yesterday, via Schaeffers.
 

"Put players are pummeling Harley-Davidson, with volume ramping up to seven times the norm today. Most active is the stock's October 22 put, where 15,729 contracts have crossed the tape on open interest of just 2,544 contracts. With volume easily outstripping open interest, it's a safe bet that much of today's volume consists of newly opened positions.

"Digging deeper into the data, it looks as though most of these October 22 puts have been purchased. Roughly 62% of the volume here has traded at the ask price, and implied volatility was up 4.7% at last check. In other words, these appear to be new bearish bets on HOG, which is currently trading near $23."




Well, it's not the prettiest looking stock chart you'll ever see. The question to always ask is, of course, whether the desire for puts is smart money or over-panic and a contrary tell.

Given the ugly picture here, it's not that surprising someone would want some downside. The prices are high in the sense that they're paying 60 volatility, which is about triple the Ten-Day HV in Harley-Davidson. But on the flip side, it's low dollar amounts as the October 22 puts closed at $0.80. And earnings are due out before October expiration.



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