Billion-Dollar Acquisition Sends UnitedHealth Stock Lower

Option traders have rarely been more bearish on UNH

Deputy Editor
Jan 6, 2021 at 10:13 AM
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UnitedHealth Group Inc (NYSE:UNH) this morning said it will acquire Change Healthcare (CHNG) for $7.84 billion in cash, or $27.75 per share -- a 41.2% premium to Change stock's closing price on Tuesday. The company hopes to strengthen its healthcare technology services unit under the Optum division. UNH is down 2.2% at $337.31, while CHNG is surging, up 33.3% to trade at a fresh high of $24.31. 

While UNH is falling back today, the security did hit a peak of $367.95 in early November. The security has since traded just south of this area, stalling out at the $358 level and later the $351 mark. Though the shares are taking a breather, the 60-day moving average has provided solid support at the charts since this pullback, and the equity still sports a year-over-year lead of 18.3%. 

Meanwhile, sentiment in the options pits has been quite bearish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) UNH sports a 10-day put/call volume ratio of 1.42, which stands higher than all but 6% of readings from the past year. This is echoed in the security's Schaeffer's put/call open interest ratio (SOIR) of 1.19, which sits in the 89th percentile of its annual range, suggesting short-term option traders have rarely been more put-biased. 

What's more, options are relatively affordable right now. This is per the equity's Schaeffer's Volatility Index (SVI) of 33% which stands higher than just 18% of readings from the past 12 months, indicating option players are pricing in relatively low volatility expectations at the moment. 

 

 

 

 

 

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