Service outage takes a toll on ELLI, customers…

A service outage for Ellie Mae’s (ELLI -6.3%) cloud-based mortgage origination software led shares to tumble below $27 today.

Ellie says the outage appears to be due to “an external malicious attack characteristic of a distributed denial of service (DDoS),” and that it has “taken actions to isolate the suspicious activity and prevent future unwarranted access.” The company adds there are no signs of a data breach.

With Ellie’s software responsible for processing 20% of U.S. mortgage originations, the outage has had major ripple effects. Lenders have been prevented from closing loans and pulling up credit reports, among other things. “Our business is at a standstill,” says a USA Mortgage loan officer.

Any ideas whether the system is back up yet? This hurts the credibility of the company.

I am glad now that my shares were called away last month at $30.

May look to get back in if it drops below $25 by doing a buy/write as the option premiums are still juicy.

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This seems to trade a little like LQDT. Lots of ups and downs. It goes up when rumors of a buy-out keep surfacing and then it goes back down. Of course this time it is down because of the outage issues.

It seems to have a $25 - $31 trading range. I still think it is a good idea to write covered calls on rips above $30 and to sell puts / buy calls on dips to $25.