JPMorgan Jumps on Humana Stock Rally

Humana options traders are showing a put-focused approach

by Josh Selway

Published on Jan 3, 2020 at 9:49 AM

Humana Inc (NYSE:HUM) shares were a beneficiary of the year-end rally to 2019, as the stock has jumped sharply since its October lows near $250 to Thursday's settlement of $363.24. Analysts at J.P. Morgan Securities are expecting more upside, too, this morning raising the firm's price target on HUM to $448 from $437.

As a result, the security is basically flat out of the gate, for now escaping the selling pressure hitting the broader markets this morning. Just below HUM's current standing is the 20-day moving average, a trendline it hasn't touched since mid-October. Indeed, the health insurer appears to be consolidating just below its Dec. 27 record high of $372.92.

As for options data on Humana, near-term traders are put-heavy, based on the Schaeffer's put/call open interest ratio (SOIR) of 1.49. This reading ranks above two-thirds of all others from the past year, showing such a put-tilt from speculators targeting contracts that expire within three months is somewhat rare.

What's more, even though peak open interest is at the January 2020 385-strike call, data actually shows sell-to-open activity here, so traders are also using calls to bet against an extended rally in HUM shares. From a broader perspective, Humana has certainly been a volatile name to follow over the past year, since its Schaeffer's Volatility Scorecard (SVS) is 97 out of a possible 100.

A Schaeffer's exclusive

11 Stocks to Buy Before Leap Day

Access your FREE insider report before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

Why One Investor Is Betting $523,111 on This 1 Stock
This small, California-based company is pioneering breakthrough technology that is enabling companies to move vast quantities of data over the Internet at lightning speeds.
Walmart Holding Steady Despite Lackluster Earnings
WMT is up 19% year-over-year
Medical Supplier Falls Victim to Coronavirus Headwinds
Disappointing earnings are shattering MDT today
IRA/401K Investment Guide: 2019 Stock Market Crash
Use gold to protect any IRA, 401(k), or retirement account from a looming financial crisis.