Is Lender Processing Services Topped Out?

Shares of Lender Processing Services LPS are trading lower on the session at 127%, at $19.47. The stock spiked to an intra-day high of $20.13 earlier I the session before being sold down hard. LPS has been downward trending throughout the session since that pop. Given the recent move in the name, where shares skyrocketed off of the January 13th $14.16 bottom, it is not unlikely that today's action indicates a short-to-medium term top in the name. Lender Processing Services is also trading well above the 20-day and 50-day moving average (both near $17.00), which should entice some shorts into the name to play mean-reversion. With just over 6% short interest and a lot of momentum built up, playing shorts shares may not be the smartest move from a risk perspective. However, the Mar2012 $20/17 put spread at a net debit $1.30 would be a good play; it gets you short the name right here, limits max losses, and has a max gain of $1.70, +131%, when shares trade lower by just 12.6%. If currently long the name, considering an overwrite would also be prudent. With only 11 days left to trade the Feb2012 $21 call offers decent premium ($0.40-0.50) for sellers, especially given the 72.58% vol on the strike versus overall historical volatility, at 41%. Lender Processing Services, Inc. is a provider of integrated technology and services to the mortgage lending industry, with mortgage processing and default management services in the United States.