One big investor apparently thinks that Harman International may drop.
optionMONSTER's Depth Charge monitoring program detected the purchase of 1,875 April 32.50 puts for about $2.87 and sold an equal number of April 45 calls for $2.37. Volume was more than 25 times open interest in both strikes.
The transaction resulted in a cost of $0.50 and is similar to selling shares in the maker of audio systems, profiting to the downside and losing money to the upside. The main difference is that it will track movements in the stock less closely as time passes and will be worthless if HAR is between $32.50 and $45 at expiration.
HAR fell 1.72 percent to $38.34 yesterday. The company's last earnings report on Oct. 21 beat expectations thanks to strong demand for its automotive sound systems in emerging markets. Management raised guidance a week later after winning a contract with VW Group.
The stock is attempting to hold its ground following a big rally last month and a pullback this month. Yesterday's option trade could have been the work of an investor who owns shares and is looking to hedge the position . In that case it would be known as a collar , protecting them below $32 and locking in their maximum upside at $45. (See our Education section)
Overall option volume in HAR was 28 times greater than average, according to the Depth Charge.
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