Hagerty Soars 14% on Secondary Offering Surge: Is This a Short-Lived Rally or a Strategic Play?

Summary
• Hagerty (HGTY) surges 14.03% to $10.65, breaking above its 52-week high of $12.35
• Secondary offering of 9.7M shares priced at $9.34 sparks immediate buying frenzy
• Turnover jumps 10.24x average volume, signaling institutional interest
• Options market sees 20 contracts active, with key put/call ratios skewed toward bullish bets

Hagerty’s stock has erupted on Thursday, fueled by a secondary offering that triggered a 14% intraday rally. The surge follows a $91 million share sale by existing shareholders, with underwriters including J.P. Morgan and Keefe, Bruyette & Woods. Despite the offering typically pressuring prices, HGTY’s shares have defied expectations, trading above their 52-week high. This article unpacks the catalysts, technicals, and options strategies to navigate this volatile move.

Secondary Offering Sparks Immediate Buy-the-Dip Sentiment
Hagerty’s 14% surge stems from a secondary offering of 9.7 million shares priced at $9.34, the same level as Thursday’s close. While secondary offerings often dilute shareholder value, this transaction triggered a 'buy-the-dip' reaction. Institutional investors likely viewed the offering as a liquidity event, with underwriters exercising a 30-day option to purchase an additional 1.455 million shares. The move also signals confidence in Hagerty’s valuation, as selling shareholders—Hagerty Holding Corp. and Aldel LLC—secured full subscription at $9.34, a 13.5% discount to the previous 52-week high. The rally reflects a combination of short-term arbitrage opportunities and long-term optimism about Hagerty’s position in the specialty insurance market.

Insurance Sector Mixed as Markel Holds Steady
The broader insurance sector showed muted movement, with Markel Group (MKL) up 0.74% despite Hagerty’s surge. This divergence highlights Hagerty’s unique catalyst: the secondary offering is a shareholder-specific transaction, not a corporate capital raise. While peers like Mercury General (MCY) and Kemper (KMPR) traded flat, Hagerty’s rally was driven by its own liquidity event rather than sector-wide trends. The offering’s focus on estate planning for Kim Hagerty’s shares further isolates the move from macro insurance sector dynamics.

Options and ETFs to Capitalize on Volatility and Breakouts
• Technical Indicators: 200-day MA at $9.97 (below current price), RSI at 41.72 (oversold), MACD histogram -0.044 (bearish), Bollinger Bands (10.23–11.13)
• Key Levels: Support at $10.23 (intraday low), resistance at $10.78 (intraday high), 52-week high at $12.35
• Options Focus: Two contracts stand out for their leverage and liquidity:

1. HGTY20250815P10
• Put option with strike $10, expiring 2025-08-15
• IV: 55.95% (elevated volatility), Leverage: 96.73%, Delta: -0.21 (moderate sensitivity), Theta: -0.00346 (slow decay), Gamma: 0.328 (high sensitivity to price swings), Turnover: 73
• Why it works: This put offers downside protection if the rally falters, with high gamma amplifying gains if the stock dips below $10. Payoff in a 5% upside scenario (to $11.18) would be $1.18 per share.

2. HGTY20250919C12.5
• Call option with strike $12.5, expiring 2025-09-19
• IV: 39.94% (reasonable), Leverage: 106.40%, Delta: 0.14 (moderate), Theta: -0.0052 (moderate decay), Gamma: 0.154 (moderate sensitivity), Turnover: 1,284
• Why it works: This call captures upside potential if Hagerty breaks above $12.50, with high leverage and liquidity. Payoff in a 5% upside scenario (to $11.18) would be $0.00 (strike not reached), but a 10% move (to $11.71) yields $0.21 per share.

Action Plan: Aggressive bulls should target the $10.78 intraday high as a short-term pivot. If HGTY closes above $10.78, consider scaling into the HGTY20250919C12.5 call. Cautious traders should use the HGTY20250815P10 put as a hedge against a post-offering selloff. Watch for volume spikes above 1.5 million shares as a bullish confirmation.

Backtest Hagerty Stock Performance
The 14% intraday surge in HGTY resulted in mixed short-to-medium-term performance. While the 3-Day win rate was 48.71%, the 10-Day win rate was slightly lower at 49.23%, and the 30-Day win rate was 54.64%, indicating a higher probability of positive returns in the short to medium term. However, the maximum return during the backtest period was -0.12%, which occurred on the same day as the intraday surge, suggesting that the positive momentum was not well sustained.

Hagerty’s Rally: A Short-Term Pop or a Strategic Setup?
Hagerty’s 14% surge is a textbook 'buy-the-dip' reaction to a secondary offering, but sustainability hinges on its ability to hold above $10.23. The options market reflects mixed sentiment: elevated put volatility suggests caution, while call options hint at optimism. Investors should monitor the 2025-08-11 closing date of the offering for liquidity clues. For now, the $10.78 intraday high is a critical level—break above it, and the 52-week high of $12.35 becomes a viable target. Meanwhile, Markel Group (MKL) remains the sector’s quiet leader, up 0.74%, signaling broader insurance sector stability. Act now: Buy the HGTY20250919C12.5 call if $10.78 holds; short-term traders should watch for a breakdown below $10.23 to trigger a defensive pivot.