Put Buying Picks Up as Ocwen Financial Corporation (OCN) Dives

Ocwen Financial Corp (NYSE:OCN) has crumbled today, down 34% to trade at $8.05, after earlier touching a five-year low of $7.64. Spurring the sharp loss was a decision by California regulators to seek suspension of the firm's mortgage license, citing a failure to submit paperwork documenting compliance with the state's Homeowner Bill of Rights. Accordingly, the stock was briefly halted, and was also placed on the short-sale restricted (SSR) list -- prompting a rush of put buying, as traders seek alternative avenues to bet bearishly.

Taking a quick step back, OCN puts are crossing at more than five times the rate expected at this point in the afternoon. Most active is the security's January 2015 7-strike put, where all signs point to buy-to-open activity. In short, these traders anticipate the shares will extend their losses through the end of this week -- when the front-month options expire -- and settle below $7 on Friday afternoon. OCN hasn't explored territory south of $7 since May 2009.

Today's technical struggles aren't anything new for the financial stock, however. Heading into the session, OCN had shed nearly 78% of its value year-over-year, ushered lower by its 10-week moving average.

As such, put buying has hit an annual extreme. Specifically, during the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), OCN has tallied a put/call volume ratio of 10.34 -- higher than all other readings from the last year.

Similarly, short interest levels are approaching a 52-week peak. During the most recent reporting period, short interest on Ocwen Financial Corp (NYSE:OCN) rose 19.1%, and more than one-quarter of the security's float is now dedicated to short interest.