Options Heat Up as LendingClub Corp (LC) Rallies

LendingClub Corp (NYSE:LC) is on pace for its highest finish since CEO Renauld Laplanche resigned amid a cloud of scandal in early May. Specifically, the stock is up 7.7% at $6.20, breaking out above the $5.80-5.90 region -- which capped the shares' rally in mid-August. Options traders have been quick to chime in, with contracts crossing the tape at four times the usual intraday pace.

While puts are changing hands at a particularly impressive eight times the expected rate for this point in the day, calls still lead puts more than 2-to-1, on an absolute basis. A large chunk of today's action has come from one trader who appears to have rolled his block of 5,000 October 6 calls up and out to the January 8 call, per data from the International Securities Exchange (ISE). By doing so, the speculator is betting LC will extend its rally beyond the $8 level over the next four months.

Taking a step back, a preference for calls over puts is nothing new for LC, though options volume has generally been light. In fact, traders on the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have purchased 5,467 calls over the last 10 sessions, compared to just 78 puts. The resulting call/put volume ratio of 70.09 sits 2 percentage points from an annual peak.

It seems likely that many of these call buyers are actually short sellers looking to hedge their bets against upside risk, however. Short interest currently represents 17.7% of LC's available float. At the average daily pace of trading, it would take nearly eight sessions to cover all these bearish positions.

The brokerage bunch hasn't had high hopes for LC recently, either. In fact, of 11 analysts tracking the stock, 10 rate it a "hold," and one a "strong sell," without a single "buy" recommendation. That pessimism is hardly surprising, as LendingClub Corp (NYSE:LC) is still sitting on a 52.5% year-over-year loss.