Humana is pulling back after a major rally, and one investor thinks it may have further to drop.
optionMONSTER's Depth Charge tracking system detected the purchase of about 3,690 July 72.50 puts for $0.95 to $1.05. An equal number of June 77.50 puts were sold at the same time for about the same price, but volume was below open interest.
That suggests an existing position was closed and rolled from one contract to another. The transaction let the investor maintain downside exposure to the Kentucky-based health insurer for an additional month.
HUM rose 0.71 percent to $77.81 yesterday and is up 42 percent so far this year. Nonetheless, it lost momentum throughout May and peaked in early June around the same level where it rolled over in early 2008.
Some chart watchers may conclude it has encountered resistance and will now face selling pressure as investors take profits.
Overall option volume in the stock was 8 times greater than average yesterday, with puts outnumbering calls by 38 to 1.
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