loanDepot's 33.98% Surge: A Servicing Revolution or Short-Squeeze Frenzy?

Summary
• loanDepot (LDI) surges 33.98% to $3.872, hitting 52-week high of $4.03
• Citron Research claims servicing portfolio alone is worth $5.50/share
• Turnover spikes to 42.4M shares, 53.5% of float traded
• RSI at 76.14 signals overbought territory, MACD bullish divergence emerges

loanDepot’s 33.98% intraday rally has ignited a firestorm in mortgage finance circles. The stock’s meteoric rise—driven by Citron Research’s bullish servicing thesis—has pushed it to a 52-week high of $4.03. With turnover at 53.5% of float and RSI near overbought levels, the question looms: Is this a sustainable valuation reset or a short-term volatility play?

Citron's Servicing Thesis Ignites LDI Volatility
Citron Research’s report has redefined loanDepot’s value proposition by spotlighting its $116–117.5B servicing portfolio. The firm argues that applying Mr. Cooper’s 1.56% servicing multiple to LDI’s book yields $5.50/share—2.5x its current price. This thesis, combined with a 70% recapture rate (double industry norms) and 79% FICO 680+ loans, has triggered a short-covering frenzy. The 33.98% surge reflects market re-pricing of servicing as a floor, not a ceiling.

Mortgage Finance Sector Gains Momentum as Mr. Cooper (COOP) Rises 0.90%
The Mortgage Finance sector, led by Mr. Cooper (COOP) with a 0.8979% intraday gain, shows modest alignment with LDI’s surge. While COOP’s 0.90% move reflects sector-wide optimism about mortgage rate normalization, LDI’s 33.98% spike is driven by idiosyncratic factors—Citron’s servicing thesis and short-covering dynamics. The sector’s 1.56% servicing multiple provides a benchmark, but LDI’s unique recapture rate and credit quality justify its premium.

Options Playbook: Leverage LDI’s Volatility with Gamma-Driven Calls
• RSI: 76.14 (overbought)
• MACD: 0.168 (bullish divergence)
• 200D MA: $1.62 (far below current price)
• Bollinger Bands: $1.53–$2.51 (price at 2.50x upper band)

loanDepot’s technicals scream short-term overextension. The RSI at 76.14 and MACD divergence suggest exhaustion, but the 200D MA at $1.62 and Bollinger Band compression indicate a potential breakout. For aggressive bulls, the LDI20250919C4 call (strike $4, expiry 9/19) offers 8.05% leverage and 191.77% IV, with 0.296 gamma amplifying price sensitivity. A 5% upside to $4.06 would yield a 15% payoff. The LDI20251017C3.5 (strike $3.5, expiry 10/17) provides 4.29% leverage and 144.30% IV, with 0.195 gamma for mid-term exposure. Both contracts have high turnover ($266K and $530K) ensuring liquidity. Aggressive bulls should target a $4.03 breakout; if failed, consider the LDI20251017P4 put for downside protection.

Backtest loanDepot Stock Performance
I attempted to identify every trading day since 2022 when loanDepot (LDI) recorded an intraday gain of at least +34 % (highest price vs. previous close), and then run a full “event back-test” on those dates.• The screening step completed successfully and produced an event-date file. • However, our event-back-test engine ran into an internal error while trying to generate statistics from that file. • A quick inspection shows the file contains only a single qualifying date (2025-09-08). With just one event, most statistical routines (e.g., minimum/maximum return distributions) have empty inputs, which triggered the crash.Because the sample size is effectively one, a formal distribution-based event study is not meaningful. We have two practical options:1. Loosen the surge threshold (e.g., require ≥ +25 % or ≥ +20 % intraday) to capture more events, then rerun the back-test. 2. Keep the single event and simply display its forward performance path (a descriptive chart rather than full statistics).Please let me know which path you prefer (or suggest another), and I’ll proceed accordingly.

Bullish Momentum Unlikely to Subside—Position for a $4.03 Breakout
loanDepot’s 33.98% surge is underpinned by a compelling servicing thesis and short-covering dynamics. While RSI overbought levels and MACD divergence hint at near-term consolidation, the 200D MA at $1.62 and Citron’s $5.50/share floor suggest a multi-month bullish trend. Mr. Cooper’s 0.90% rise reinforces sector optimism. Investors should monitor the $4.03 intraday high as a critical breakout level—success could trigger a retest of the 52-week high. For now, LDI20250919C4 and LDI20251017C3.5 offer high-leverage entry points. Watch for a $4.03 close above the 52-week high to confirm the new trend.