Trader looks for UnitedHealth to move


A large trader is looking for UnitedHealth Group to break up or down.

optionMONSTER's tracking programs detected the purchase of about 11,000 December 35 calls for $1.78 and an equal number of December 34 puts for $1.62. Volume was more than 4 times open interest in both strikes.

UNH The trade, known as a strangle, cost a net $3.40 to implement. It will make money if the health insurer falls below $30.60 or rallies above $38.40. It also stands to profit from higher implied volatility in the stock, which would increase the value of the calls and puts. (See our Education section)

Implied volatility in UNH is now about 30 percent, down from 40 percent in late May. The trade, which essentially made the investor "long volatility," marks a contrast from the broader pattern lately where investors have been "selling volatility." For instance, a short strangle appeared yesterday on container company Crown Holdings.

UNH rose 2.34 percent to $34.93 yesterday and is now sitting near the same level where it stalled in January. If it breaks this resistance level, bulls may expect it to run toward $40, a level where it gapped lower in March 2008.

The last earnings report on July 20 beat expectations. The next one hasn't yet been scheduled, but it will probably occur in late October. Investors may expect implied volatility to climb into the release--a common trend.

Overall option volume in UNH was 9 times greater than average in yesterday's session.

(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



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Most Active by Volume

  • $10.50 ▲ 3.04%
  • $29.22 ▲ 4.62%
  • $16.36 ▼ 0.49%
  • $113.29 ▲ 0.33%
  • $2.39 ▲ 4.82%
  • $5.78 ▲ 0.87%
  • $105.62 ▼ 0.02%
  • $28.42 ▲ 2.53%
As of 8/28/2015, 04:15 PM

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