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Sallie Mae Options Are 'Exploding'

Puts are exploding in student loan company Sallie Mae, as the Obama administration is considering a proposal to have all student loans flow through the Education Department's direct-lending program.

Less than halfway through Thursday's trading, about 27,000 puts had already changed hands, dwarfing the average full-session volume of 8,000 contracts. The March 5 puts alone saw 23,900 trade for $1.05 to $1.10, according to OptionMonster's tracking systems.

SLM stock is down more than 40 percent in early afternoon trading to about $5 even. More than 18 million shares traded in the first 90 minutes of today's session, more then double the average volume of 7.8 million for a full day.

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Ill-Fated Govt.-Backed Loan Cos.

Fannie Mae

Freddie Mac

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Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.

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