Option Investor
New Plays

New Option Plays

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Strangle Options Plays
None HOG None

Play Editor's Note: I haven't had a chance to read tonight's market wrap yet but I'm going to throw in my two cents worth. It would have been very tempting to buy the bounce today. However, the trend in the major averages is still bearish. Plus, the markets have been up one day and down the next for the last several days in a row. It's hard to draw any conclusions from a one-day bounce. We are adding one new play and it's bearish.

New Calls

None today.

New Puts

Harley Davidson - HOG - cls: 46.48 change: +0.03 stop: 50.01

Company Description:
Harley-Davidson, Inc. is famous for its heavy-duty motorcycles and accessories.

Why We Like It:
A few days ago we listed HOG in one of our play editor's notes as a stock to watch as a potential play. We're going to jump in today and list it as a bearish candidate for puts. The stock's been in a bearish trend for months and the recent trading has seen a bearish head-and-shoulders pattern and a breakdown to new multi-year lows. The oversold bounce in just the last few sessions is beginning to fade. Positive comments in this weekend's Barron's edition appear to have been canceled by news last night that HOG is shutting down some of its production due to slowing sales. The declining housing market has shut off the home-equity ATM machine and killed the "wealth effect" that Americans have been feeling for years. Concerns over consumer credit and tightening lending standards may continue to dampen sales. We're suggesting a stop loss at $50.01 but more conservative traders might try a stop near $49 or $48. The $48 level looks like short-term resistance. Our target is the $41.00-40.00 range. The P&F chart is bearish with a $38 target.

Suggested Options:
We are suggesting the January puts.

BUY PUT JAN 47.50 HOG-MW open interest=2061 current ask $3.30
BUY PUT JAN 45.00 HOG-MI open interest=8872 current ask $2.15
BUY PUT JAN 40.00 HOG-MH open interest=4943 current ask $0.80

Picked on November 27 at $ 46.48
Change since picked: + 0.00
Earnings Date 01/17/08 (unconfirmed)
Average Daily Volume = 2.1 million

New Strangles

None today.

New Play Archives