Bulls rev up more profits in $HOG

Option traders have turned big profits on upside positions in Harley-Davidson for the second time in less than a week.

On June 6, Investitute’s market scanners identified the purchase of 3,000 July $42.50 calls for $1.42 as part of a bullish spread with shares at $42.54. This was clearly a new position, as volume was well above the strike’s open interest of 1,049 contracts.

Those calls sold for $3.65 today, more than 2.5 times their purchase price. The stock rose 7.4% in the same time frame, illustrating the kind of leverage that can be achieved with options. It was the second winning trade in HOG posted on Investitute in the last four sessions.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

HOG was up 2.17% today to close at $45.68. The motorcycle icon, which has rebounded this month with strength in the retail sector, popped again today after Northcoast reported positive sales trends for the company in May.