HOG Analysis

Harley-Davidson Inc. (HOG)

Update 7/24/2017: HOG gapped downward after earnings were published and then rose to recover a portion of the decline, and I exited as expiration approached.

Shares declined by 5.4% over 10 days, or a -198% annual rate. The options position produced a 0.1% yield on debit for a +35% annual rate.

HOG publishes earnings on Tuesday before the opening bell.

I shall use options that trade for the last time 11 days later, on July 28.

Implied volatility stands at 39%, which is four times the VIX, a measure of the volatility of the S&P 500 index.

HOG’s IV stands in the 66th percentile of its annual range and the 86th percentile of its most recent broad movement.

The price used for analysis was $51.32.

Premium: $3.17 Expire OTM  
HOG-iron fly Strike Odds Delta
Long 58.00 92.0% 9
Break-even 54.67
Short 51.50 54.3% 49
Short 51.50 45.7% 51
Break-even 48.17
Long 45.00 87.8% 10

The premium is 49% of the width of the position’s wings.

The risk/reward ratio is 1.1:1.

Decision for My Account

I have entered an order on HOG as described above. The stock at the time of entry was priced at $51.21.

By Tim Bovee, Portland, Oregon, July 14, 2017


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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