Mr. Cooper Group Soars 11.2% on Earnings Surprise and Sector Rally—What’s Next?

Summary
• Mr. Cooper Group (COOP) hits all-time high of $179.36
• Q2 revenue beats estimates by $3.25M, EPS misses by $0.20
• Sector leader Rocket Companies (RKT) surges 11.3%
• Intraday price jumps 11.2% to $173.16, trading near 52W high

Mr. Cooper Group’s stock is experiencing a dramatic intraday rally, surging 11.19% to $173.16 on robust revenue performance and sector tailwinds. The mortgage finance giant’s Q2 results, coupled with a broader industry rebound in refinancing activity, have ignited a buying frenzy. With Rocket Companies leading the sector’s charge and COOP nearing its 52-week high, investors are scrambling to decipher whether this is a sustainable breakout or a volatility-driven spike.

Q2 Revenue Beat and Sector Momentum Fuel COOP’s Surge
Mr. Cooper Group’s 11.2% intraday gain is driven by a combination of its Q2 revenue beat and positive momentum in the mortgage finance sector. While the company missed EPS estimates ($3.04 vs. $3.24), it exceeded revenue forecasts by $3.25M ($681M vs. $677.75M), signaling operational resilience amid high interest rates. The stock’s surge aligns with sector-wide optimism, as refinancing volumes rebound and mortgage rates stabilize. Analysts note that COOP’s strategic focus on operational efficiency and technology investments has bolstered confidence, particularly as the company navigates a challenging mortgage environment.

Mortgage Finance Sector Gains Momentum as Rocket Companies (RKT) Surges 11.3%
The mortgage finance sector is rallying on improved refinancing activity and lower volatility in mortgage rates. Rocket Companies (RKT), the sector’s dominant player, surged 11.3% alongside COOP, reflecting shared tailwinds. Both companies are benefiting from increased demand for mortgage services as homebuyers capitalize on mid-6% rates. COOP’s 11.2% gain mirrors the sector’s broader trend, with nonbank servicers like COOP and RKT gaining market share over traditional banks. The sector’s momentum is further supported by Fannie Mae’s updated credit score policies, which are expected to boost originations.

Options Playbook: High-Leverage Calls and Volatility-Driven Puts Take Center Stage
• MACD: 3.85 (bullish divergence), Signal Line: 4.34, Histogram: -0.49
• RSI: 57.46 (neutral, near overbought threshold)
• Bollinger Bands: Upper $168.29, Middle $153.36, Lower $138.42 (price near upper band)
• 200D MA: $114.65 (far below current price)

COOP’s technicals suggest a short-term bullish trend with long-term upside potential. Key support is at the 30D support zone ($149.01–$149.53), while resistance lies at the 52W high of $180.57. The stock’s RSI near overbought territory and MACD divergence hint at a potential pullback, but the 200D MA’s $114.65 level underscores a strong fundamental base. For leveraged exposure, consider options with high implied volatility and moderate delta.

Top Option 1: COOP20250815C170
• Type: Call, Strike: $170, Expiration: 2025-08-15
• IV Ratio: 56.06% (moderate volatility), Leverage Ratio: 17.47%
• Delta: 0.603 (moderate directional bias), Theta: -0.5299 (high time decay)
• Gamma: 0.0195 (strong sensitivity to price moves), Turnover: 11,444
• Payoff at 5% Upside (ST = $181.81): $11.81/share
• This call offers high leverage and gamma, ideal for capitalizing on a continuation of the intraday rally. The moderate IV and high turnover ensure liquidity for entry/exit.

Top Option 2: COOP20250815P170
• Type: Put, Strike: $170, Expiration: 2025-08-15
• IV Ratio: 51.30% (moderate volatility), Leverage Ratio: 32.77%
• Delta: -0.391 (moderate bearish bias), Theta: -0.0178 (low time decay)
• Gamma: 0.0213 (strong sensitivity to price moves), Turnover: 39,210
• Payoff at 5% Upside (ST = $181.81): $0 (out of the money)
• This put is a volatility play, hedging against a potential pullback. The high turnover and moderate IV make it suitable for short-term volatility betting.

Hook: Aggressive bulls may consider COOP20250815C170 into a breakout above $175, while volatility traders can pair it with COOP20250815P170 for a straddle.

Backtest Mr. Cooper Group Stock Performance
The COOP index has historically shown positive short-to-medium-term gains following an intraday surge of 11% or more. The backtest data reveals that 55.29% of days resulted in a positive return within three days, with an average return of 0.65%. Over ten days, the win rate increased to 61.86%, with an average return of 1.92%. Furthermore, a 30-day analysis shows a 74.27% win rate, indicating that COOP tends to maintain momentum over longer periods, with an average return of 5.72%. The maximum return observed was 11.10%, which occurred on day 59 of the backtest period.

Bullish Momentum Unlikely to Fade—Act Fast on 170-Call or 170-Put for Volatility Play
Mr. Cooper Group’s 11.2% surge is underpinned by strong revenue performance and sector-wide momentum, making it a compelling candidate for continued upside. The stock’s proximity to its 52W high and robust technicals suggest a high probability of testing $180.57 within two weeks. Investors should monitor the 170-strike options for directional and volatility plays, as the sector leader Rocket Companies (RKT) surges 11.3%. Act now: Buy COOP20250815C170 for leveraged upside or pair it with COOP20250815P170 to hedge against volatility. Watch for a breakdown below $163.35 (intraday low) to confirm trend strength.