Options Alert: LoanDepot Calls, FirstEnergy Puts
Mortgage lender sees 13x normal call volume while utility draws 45x average put activity. Two unusual flows worth watching this week.
Two names are lighting up options screens Tuesday morning.
LoanDepot (LDI) and FirstEnergy (FE) both saw unusual volume that dwarfs their normal trading patterns—one bullish, one bearish. When flow gets this lopsided, someone usually knows something.
LoanDepot: The Bullish Bet
The mortgage lender saw call volume hit 11,925 contracts Tuesday, 13 times its average daily volume. Put activity was nearly nonexistent—calls outnumbered puts 200 to 1.
That's an extreme ratio. Most stocks see call-to-put ratios between 0.5 and 2 on a typical day. A 200:1 skew signals concentrated bullish positioning.
The action focused on the January 23rd expiration—just three days out. Traders targeted the $2.50 and $3.00 strike calls, both slightly out-of-the-money with the stock trading around $2.97.
Short-dated, out-of-the-money calls are the riskiest options you can buy. They're cheap in dollar terms but expensive in implied volatility terms, and they decay rapidly. The only reason to buy them is conviction that something is about to move the stock.
LoanDepot has struggled since the mortgage market froze in late 2022, but there's been speculation about potential industry consolidation. Mortgage originators with scale could become attractive acquisition targets as rates eventually normalize. Whether that's what's driving today's flow is anyone's guess.
The stock popped 11% to $2.97 on the unusual activity. Watch for news over the next 48 hours.
FirstEnergy: The Bearish Bet
On the other side of the ledger, FirstEnergy saw 20,305 put contracts trade—45 times its average daily put volume. Call activity was minimal, creating a put-to-call ratio of 100:1.
Nearly all the flow concentrated in the February 20th expiration, about a month out. Traders targeted the $45 strike, roughly 4% below Tuesday's $47.05 price.
The execution tells a story. Multiple large block trades hit the tape at an average price of $0.65 when the bid-ask was $0.55 x $0.65. Paying the offer on size suggests urgency—whoever bought these puts wanted the position established immediately.
FirstEnergy is a regulated utility serving Ohio, Pennsylvania, and West Virginia. Utilities don't typically see this kind of options activity. They're boring by design—stable cash flows, regulated returns, and dividend yield that attracts income investors.
So what's driving the put buying?
A few possibilities. FirstEnergy reports Q4 earnings on February 13, after these options expire. That rules out a direct earnings play. The company has ongoing legal issues from a bribery scandal that led to criminal charges against former executives, but those have been well-known for years.
One angle worth watching: FirstEnergy recently announced plans to issue $1 billion in new equity. Dilutive offerings often pressure stocks in the short term, and a 4% decline to $45 would be a reasonable outcome.
Context for Options Traders
This week's flow continues a pattern of elevated unusual activity we've tracked recently. Carrier Global saw 100x normal put volume Friday, and Devon Energy drew attention earlier in the month.
The common thread is positioning ahead of potential catalysts. Options give traders leveraged exposure to events, and when volume spikes dramatically, it usually means someone is betting on movement.
For those following along, here's how to trade this information:
Following the flow means buying the same options as the unusual activity. This works when the smart money is right—which is far from guaranteed. You're also paying elevated implied volatility and competing with traders who have better information.
Fading the flow means taking the opposite side, betting that the unusual activity is noise or mispriced. This can work, but you're swimming against strong currents if real news is coming.
Using flow as a signal means incorporating it into broader analysis without trading the options directly. If someone is betting heavily on LoanDepot, maybe the mortgage sector deserves more attention. If FirstEnergy is drawing bearish bets, maybe utilities face headwinds you haven't considered.
The safest approach is usually the last one. Unusual activity is a data point, not a trading system.
What to Watch
LoanDepot's January 23rd calls expire Friday. If there's no news by then, the premium evaporates. Check for press releases, SEC filings, or M&A rumors over the next three days.
FirstEnergy's February 20th puts have more time to work. Watch for equity offering pricing details—the timing and discount to market could determine whether the $45 target gets hit.
For broader options market coverage, visit our Options hub.