Bears Busy as Ocwen Financial Corporation (OCN) Tanks

Ocwen Financial Corp (NYSE:OCN) is off 4.6% this afternoon to trade at $8.15. Option skeptics have responded, too, as puts are crossing at 1.5 times the expected intraday rate.

The majority of OCN puts traded so far have done so at the out-of-the-money March 7 strike. It appears a number of these positions are being bought to open, as option players gamble on additional downside over the next six weeks.

Looking at the charts, OCN was churning below $7 as recently as last Thursday, before getting a lift from a regulatory update, which expressed confidence regarding the firm's liquidity levels -- despite 21 pending state-level examinations. This is especially good news, considering the company's recent $2.5 million settlement with California regulators. Today, however, a major Home Loan Servicing Solutions Ltd (NASDAQ:HLSS) shareholder urged the firm to cut ties with OCN, threatening to take aim at HLSS' board.

In recent sessions -- today notwithstanding -- traders have preferred bullish bets over bearish. Ocwen Financial Corp's (NYSE:OCN) 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.29 ranks in the 71st percentile of its annual range. However, short interest rose 28.3% during the two most recent reporting periods, so a portion of these long calls may have been at the hands of short sellers seeking an upside hedge.