Why Put Buyers Are Targeting Harbin


By David Russell

Harbin Electric (NASDAQ:HRBN) has been drifting higher on buyout chatter, but option traders are looking for a drop.

optionMONSTER's Depth Charge tracking program detected the purchase of more than 5,700 December 15 puts, most of which priced for $0.35, against open interest of 2,761 contracts. The trade pushed total option volume in HRBN to more than twice the daily average.

Shares of the Chinese electric motor maker are up 0.92 percent to $21.98 in late morning trading. It gapped from about $20 to $25 on Oct. 11 after its chairman and Baring Private Equity Asia Group offered to take the company private for $24 a share.

It slowly edged lower in subsequent sessions and then plunged on Oct. 25, despite a lack of further news on the takeover. There was also a bullish call spread late last month.

Puts account for a bearish 95 percent of the activity in the stock so far today. HRBN is scheduled to report earnings after the bell tomorrow.

Disclosure: No position