Ocwen Financial Corp (OCN) Puts Popular Amid Short-Sale Restriction

Ocwen Financial Corp is lingering in two-year-low territory this afternoon

Dec 22, 2014 at 1:45 PM
facebook twitter linkedin


Ocwen Financial Corp (NYSE:OCN) is panning fresh two-year lows today, after the company announced the resignation of CEO William Erbey as part of a $150 million settlement with New York's financial regulator. At last check, the stock was off 29.7% at $15.40 -- making it the biggest loser on the Big Board -- and earlier hit the $15.23 mark, its lowest level since May 2012. Against this backdrop, the stock has earned a place on the short-sale restricted list, and put volume is booming, as speculators look for alternate ways to be bearishly on the equity.

Specifically, puts are crossing the tape at eight times the average intraday pace, and amid today's bearish gap, the equity's 30-day at-the-money implied volatility has jumped 27.9% to 75.5% -- in the 97th percentile of its annual range. The stock's two most active strikes are the April 20 and 21 puts. It appears there could be some buy-to-open activity happening here, as traders roll the dice on OCN to continue its struggles through April options expiration.

Today's accelerated put activity is just more of the same for a stock that's spent most of 2014 being pressured lower by its 10-week moving average. However, this bearish positioning isn't relegated to the options pits, with nearly 23% of the equity's float sold short. In fact, it would take more than a week to cover all of these shorted shares, at Ocwen Financial Corp's (NYSE:OCN) average daily pace of trading.

Weekly Chart of OCN Since January 2014 With 10-Week Moving Average

What This Election Year Means for Stocks

Ipad with I voted sticker

  


 
Special Offers from Schaeffer's Trading Partners