Options Volume Explodes on Scandal-Ridden LendingClub Corp (LC)

LendingClub Corp (NYSE:LC) call volume hit an annual peak on Wednesday

May 12, 2016 at 9:17 AM
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It's been a wild week for the shares of LendingClub Corp (NYSE:LC), after the consumer lending firm's CEO abruptly resigned following a highly publicized loan scandal. Since last Friday's close, LC stock has plunged 42.5% to $4.08 -- and tagged a record low of $3.95 yesterday. Against this backdrop, LC stock volume hit a 52-week high of roughly 96 million shares traded on Monday, while options volume has exploded, topping out at an annual peak of 182,383 options traded yesterday.

Drilling down, the majority of Wednesday's action was driven by call players, with 150,661 LC call options on the tape -- an annual high. By contrast, around 31,722 put options traded, far fewer than the 12-month peak of 109,483 contracts exchanged on Tuesday.

Most active by a mile was LC's June 4 call, where 102,862 contracts traded. Open interest surged by 88,291 contracts overnight, making this the top open interest position on the stock -- with 88,907 calls currently in residence. According to Trade-Alert, the majority of Wednesday's activity was driven by call buyers, meaning traders expect LC to extend its lead over $4 through the close on Friday, June 17, when back-month options expire.

Also receiving notable attention was LC's October 4 call. Specifically, a massive 28,550-contract block was apparently sold to open -- per data from the International Securities Exchange (ISE) -- for an initial credit of about $2.7 million (number of contracts * $0.95 premium collected * 100 shares per contract). However, Trade-Alert suggest this may be part of a larger covered-call strategy, as one LendingClub Corp (NYSE:LC) shareholder attempts to dull the pain of the stock's recent spiral.

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