July 11th Options Now Available For Harley-Davidson (HOG)

An investor selling a $24 put option on Harley-Davidson (HOG), currently trading at $24.60, could realize a 4.58% return (38.91% annualized) if the contract expires worthless, which analytical data suggests has a 58% probability. This strategy offers a potential discount to purchasing HOG shares outright, reducing the cost basis to $22.90 if the shares are assigned, with the put option's implied volatility at 61% compared to the stock's 40% trailing twelve-month volatility.

Analysis

The article details an options strategy for Harley-Davidson Inc. (HOG), currently trading at $24.60 per share. Specifically, it examines selling a put contract with a $24.00 strike price, which has a bid of $1.10. This strategy would commit the seller to purchasing HOG shares at $24.00 if the option is exercised, but the premium received reduces the effective cost basis to $22.90 per share, an attractive alternative for investors already considering a purchase. The $24.00 strike is approximately 2% out-of-the-money, and analytical data suggests a 58% probability of this put contract expiring worthless. Should this occur, the collected premium of $1.10 would represent a 4.58% return on the cash commitment, or a 38.91% annualized yield, termed 'YieldBoost'. A notable observation is the disparity between the put contract's implied volatility of 61% and HOG's actual trailing twelve-month historical volatility of 40%, indicating that options premiums may be elevated, favoring option sellers.

Key Decisions for Investors

• Investors considering acquiring Harley-Davidson (HOG) shares could evaluate selling the described $24.00 strike put option to potentially achieve a lower cost basis of $22.90 or generate a 4.58% cash-on-cash return if the option expires worthless.
• The elevated implied volatility of 61% for the put contract compared to HOG's 40% historical volatility suggests option premiums are relatively rich, potentially making option-selling strategies on HOG attractive for income generation.
• Assess the 58% probability of the put option expiring worthless against the commitment to purchase HOG shares at $24.00 if the price declines below the strike by expiration, ensuring this aligns with individual stock outlook and risk tolerance.