UnitedHealth Stock Rallies After Biden's Big Win

Biden's win is boosting healthcare stocks spooked by Bernie Sanders

by Patrick Martin

Published on Mar 4, 2020 at 11:13 AM
Updated on Jun 24, 2020 at 10:16 AM

Leading the Dow's charge today is UnitedHealth Group Inc (NYSE:UNH), last seen up 10.2% to trade at $287.90. This in direct response to former Vice President Joe Biden's resounding victory yesterday in the Super Tuesday primaries.

Biden has now picked up 453 delegates and political momentum to pass prior favorite Senator Bernie Sanders (382 delegates). The healthcare sector and UNH are relieved to see Bernie's early surge replaced by the more middle-of-the-road Biden, given the former's support for the elimination of private insurance.

UnitedHealth's rally today almost single-handedly brings the stock back to its year-to-date breakeven point. The shares have also reclaimed their 80-day moving average, a trendline that caught a pullback in early February, but was breached last week amid the COVID-19-fueled sell-off. 

Options traders have been focusing on puts in the meantime. The security's 10-day put/call volume ratio of 0.71 ranks in the 86th annual percentile at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). What this means is that while calls have outpaced puts on an absolute basis, the rate of put buying relative to call buying has been accelerated.

Echoing this, UNH's Schaeffer's open interest ratio (SOIR) of 1.26, ranks three percentage points from an annual high. In other words, short-term options players have rarely been more put-heavy during the last 12 months. 


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