UNH Stock Pops on Accelerated Payment Promise

UNH is just one insurance stock benefiting from Bernie Sanders' resignation from the presidential race

by Jake Scott

Published on Apr 8, 2020 at 2:09 PM

UnitedHealth Group Inc (NYSE:UNH) announced last night that it will speed up payments and support totaling nearly $2 billion to health care providers in order to combat the financial challenges posed by the coronavirus pandemic. Additionally, UNH is just one of many health insurers getting a bump after Senator Bernie Sanders announced that he is pulling out of the Democratic presidential race, effectively setting the stage for a general election between current U.S. President Donald Trump and former Vice President Joe Biden. At last check, UNH stock is up 4.4% to trade at $258.85.

Today’s surge has the security on track to close above it’s 200-day moving average for the first time in nearly a month. While UNH is still down 12.1% year-to-date, it has added almost 38% since its March 23 three-year low of $187.72. 

UNH chart APR 8

Analysts are extremely bullish on the blue chip. Of the 18 analysts covering the equity, 15 rate it a “buy” or better. The remaining three all say “hold.” Adding to this is UNH’s consensus 12-month price target of $321.39 which is a 24.1% premium to the stock’s current levels.

In the options pits, puts have been the preference in the last 10 days. UNH sports a 10-day put/call volume ratio of 1.58 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than all but 1% of readings during the past 12 months, suggesting a higher-than-usual appetite for long puts of late.

Echoing this, UNH's Schaeffer's put/call open interest ratio (SOIR) of 0.97 sits in the elevated 82nd percentile of its annual range. In other words, short-term options players have rarely been more put-heavy during the past 12 months.

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