Last-minute call sellers target Ocwen
Ocwen Financial has soared in recent months, but traders apparently believe that further gains will be limited in the next year.
Our scanners show that 10,195 January 2018 7 calls were sold for $1.05 in the last 8 minutes of yesterday's session. This is clearly new positioning, as open interest in the strike was only 235 contracts before day began.
Short calls generate income and lock in the price where a stock must be sold. The trade is usually done in conjunction with long shares in a covered-call strategy, reflecting a belief that upside will be limited through expiration. (See our Education section)
OCN rose 1.04 percent to $5.81 yesterday and is up 58 percent in the last three months. The mortgage-servicing firm is expected to report earnings in pre-market hours on Feb. 28.
Overall option volume in OCN was 5 times greater than average yesterday.
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