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Why traders are selling calls in Ocwen

David Russell (david.russell@optionmonster.com)

Ocwen Financial has rallied hard, and some traders are throwing in the towel for now.

optionMONSTER's tracking programs detected the sale of about 4,600 October 25 calls for $1.80 and $1.75. Volume was almost 10 times open interest at the strike.

OCN is down 0.31 percent to $25.65 this morning but is up almost 60 percent in the last six months. The loan-servicing company has been exploding higher as mortgage delinquencies decline and investors discover an emerging niche in the financial sector.

Today's traders are now obligated to sell shares for $25 if they're above that level on expiration, but including the credit earned their exit price would be $26.75 to $28.80. They probably own the stock and are using the options to take some profits following the big run. (See the discussion of covered calls in our Education section for more.)

Overall option volume in OCN is twice average amounts so far today.

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