The shares of Lehman Brothers Holdings (LEH: sentiment, chart, options) have spiked sharply higher this morning on news that Korea Development Bank (KDB) is pondering a potential acquisition of the U.S. investment bank. A spokesman for KDB told Reuters, "We are studying a number of options and are open to all possibilities, which could include [buying] Lehman."

Today's news comes on the heels of an upgrade for LEH. On Thursday, analyst Richard Bove of Ladenburg Thalmann raised the stock to "buy," citing the possibility of a hostile takeover.

On the other hand, brokerage firm Sandler O'Neill also weighed in on Lehman this morning. The firm slashed its price target on LEH from $30 to $15, reiterated a "hold" rating, and widened its 2008 and third-quarter loss-per-share estimates. Sandler expects Lehman to lose $2.50 per share in the third quarter, compared to its prior estimate for a profit of 35 cents. For the full year, a loss of $6.13 rather than $2.78 is expected.

At last check, LEH shares are more than 12% higher after tapping an intraday peak just shy of the 16 level. The stock has dropped 79% year-to-date, and has been stifled by resistance from its 10-week and 20-week moving averages since February.

In the options pits, traders are adding new positions on the September 18 and October 27 calls. The former has seen 11,725 contracts change hands on open interest of 8,551, while the latter has seen 10,010 contracts cross the tape on open interest of 2,167. Put options are not quite as active; the most popular contract is the October 12.50, which has traded volume of 11,145 on open interest of 19,503.