UnitedHealth Stock Lower on Analyst Downgrade

Ahead of today, no brokerage firms held bearish positions on UNH

by Emma Duncan

Published on Sep 10, 2018 at 9:52 AM
Updated on Jun 24, 2020 at 10:16 AM

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Shares of UnitedHealth Group Inc (NYSE:UNH) are lower in early trading after the healthcare name received a downgrade to "neutral" from "buy" at Citigroup. Also moving to the sidelines on Anthem (ANTM), Citi analyst Ralph Giacobbe cited a commercial risk market and high valuations as his main reservations. UNH is down 1.3% at $264.68, at last glance.

UnitedHealth stock has been moving higher on the charts since the late-2008 market crash, more recently seeing support from its 40-day and 50-day moving averages. UNH has picked up 21% year-to-date, and this past Friday, Sept. 7, peaked at an all-time high of $271.13. Against this backdrop, all 16 analysts covering the healthcare name carried "buy" or "strong buy" recommendations ahead of today's trading.

Looking toward options, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows UnitedHealth stock sporting a 10-day call/put volume ratio of 1.86, ranking in the 79th annual percentile. This suggests calls have been bought over puts at a faster-than-usual clip during the past two weeks.

Echoing this, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.74 ranks in the 28th percentile of its annual range. This shows that short-term traders have rarely been more call-heavy toward the security in the past year. Further, the September 262.50 and 267.50 calls saw some of the largest increases in open interest during the past two weeks, with more than 2,500 total contracts added.

Plus, now may be a prime time for those considering buying options to bet on the Dow stock. This is based on the security's Schaeffer's Volatility Index (SVI) of 15%, which sits just 6 percentage points from an annual bottom -- indicating low volatility expectations are being priced into short-term contracts.


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