I would like to make a suggestion on a debit spread on a stock we traded before. That stock is Harley Davidson Inc.(HOG).
HOG is trading around $26.30 as I write this.
HOG reported already, so we do have to be concerned with an earnings release.
My suggestion is to trade the September 4th weekly options.
This gives the stock about three weeks to make a move.
Here is how you open the position:
Buy to Open September 4th - $26.00 Call for $1.70
Sell to Open September 4th - $29.50 Call for $0.45
The net debit will be $1.25 per spread, with a maximum gain of $2.25 per spread.
Based on the tracking portfolio, I suggest you limit the trade to an 8 lot or 1% of the portfolio.
The maximum gain on a five lot would be $1,800.