JPMorgan Jumps on Humana Stock Rally

Humana options traders are showing a put-focused approach

Jan 3, 2020 at 9:49 AM
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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.


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