Option Bears Circle Ocwen Financial Corporation (OCN)

Ocwen Financial Corp (OCN) option bears are active after the firm delayed its annual report

Mar 18, 2015 at 1:45 PM
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Option bears are blitzing Ocwen Financial Corp (NYSE:OCN), after the firm once again delayed its annual report, and said it will sell $9.6 billion in mortgage servicing rights to a Walter Investment Management Corp (NYSE:WAC) subsidiary. After being temporarily halted and landing on the short-sale restricted list, OCN was last seen 1.7% lower at $8.84, and puts are trading at twice the normal afternoon clip.

More than 9,000 OCN puts have traded thus far -- three times the number of calls exchanged. Most active is the March 8 put, which it appears traders are buying to open to gamble on a retreat south of $8 by Friday's close, when front-month options expire. OCN hit an intraday nadir of $8.06 today.

Even before today's drama, OCN option players were picking up puts at a near annual-high clip. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 7.03 stands higher than 96% of all other readings from the past year.

In the same vein, OCN's Schaeffer's put/call open interest ratio (SOIR) of 1.94 registers in the 96th percentile of its annual range. In simpler terms, near-term option players have rarely been more put-biased during the past 12 months.

Meanwhile, short interest accounts for nearly one-third of OCN's total available float. Among analysts, just one of six offers up a "buy" or better rating, underscoring the rampant skepticism on the Street.

On the charts, it's been a rough ride for Ocwen Financial Corp (NYSE:OCN), with the stock surrendering roughly three-quarters of its value in the past year. Since its post-earnings bear gap in late July, the equity's rebound attempts have been halted by its descending 60-day moving average. Off the charts, OCN continues its efforts to raise cash, but today warned that a failure by Home Loan Servicing Solutions Ltd (NASDAQ:HLSS) to meet funding obligations "could have a material negative impact" on the company's financial situation.

Daily Chart of OCN since June 2014 with 60-Day Moving Average
 

 

 

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