Following the news, E*Trade confessed that Citadel Investment Group's stake in the company could jump to near 50% as a result of its capital-raising efforts. Citadel is already the firm's largest stock and bond holder, and rejected the E*Trade board's request to freeze the amount of its stock ownership.

Meanwhile, Moody's added that it may still cut E*Trade's B3 long-term issuer rating in the wake of today's announcement. "Given the magnitude of the task, and the company's unstable financial condition, there is substantial execution risk" in the share offering and debt swap, warned Moody's vice president Alexander Yavorsky. "This is the main reason why we are continuing our review for a possible downgrade."

Bullish sentiment has recently been building toward ETFC, at least among option players. During the past five days, traders on the International Securities Exchange (ISE) have bought to open 31,023 calls on the stock, compared to just 601 puts. This rising optimism helps to explain why the equity has plunged so hard today, down more than 15% in the first hour of trading.

Speculative investors are quickly changing tacks, though. By 10:45 a.m., ETFC's June 2 put traded volume of 9,401 contracts on open interest of just 4,672 puts. With volume outstripping open interest on this soon-to-expire option, it's likely that traders are adding new pessimistic positions on the security.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.