More downside seen for UnitedHealth

By
A A A

UnitedHealth has been trending lower almost all year, one bear is looking for another push lower.

optionMONSTER's Depth Charge tracking system detected the purchase of 5,000 August 28 puts for $0.33 and the sale of an equal number of August 33 calls for $0.25, resulting in a debit of $0.08. The position will deliver leveraged profits if UNH falls below $27.92 by expiration and lose money over $33--a price the stock hasn't seen since early April.

UNH Chart The health insurer rose 0.3 percent to $30.41 in morning trading. The stock is up 7 percent this month but only after rebounding off a lower low than was made in June. It's also been making lower highs since reversing from a 21-month high of $36.07 on Jan. 20.

Today's bearish trade appeared after UNH failed to hold an early spike above its 200-day moving average (red line on chart). The trader apparently expects more resistance at this level, which would also represent a lower high and suggest further downside is in store.

Sentiment has been bearish in the sector amid worries about health-care legislation passed earlier this year, despite strong results from the companies. UNH, for instance, crushed estimates and raised full-year guidance the last time it reported earnings on April 20. Its next quarterly release is scheduled for the premarket on July 20.

There was also selling in the August 30 and September 30 calls. Volume was below open interest in each, suggesting that investors were unloading existing positions after the recent run.

Overall option volume in UNH has been about 73 percent above average so far today.

(Chart courtesy of tradeMONSTER)



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: UNH

optionMONSTER

optionMONSTER

More from optionMONSTER:

Related Videos

Stocks

Referenced

83%

Most Active by Volume

48,099,947
  • $16.09 ▲ 0.50%
40,277,806
  • $102.50 ▲ 0.24%
40,236,499
  • $19.57 ▲ 2.35%
31,092,510
  • $49.75 ▲ 0.65%
30,795,218
  • $34.92 ▲ 0.78%
29,910,855
  • $3.63 ▲ 0.83%
24,019,154
  • $13.06 ▼ 0.38%
23,753,906
  • $74.82 ▲ 1.31%
As of 8/29/2014, 04:04 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com