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.
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
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)
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