Calls Popular Ahead of UnitedHealth Group Incorporated (UNH) Earnings

UnitedHealth Group Inc. (UNH) will report earnings on Thursday morning


Published on Apr 13, 2015 at 11:21 AM
Updated on Apr 20, 2015 at 5:32 PM

UnitedHealth Group Inc. (NYSE:UNH) is moving higher today, thanks to a positive note from Jefferies. The brokerage firm raised its opinion on the Dow component to "buy" and upped its price target to $141. The equity was last seen 1.2% higher at $120.44, with options bulls rushing to the scene. Calls are crossing the tape at more than double the normal intraday pace, outnumbering puts by a nearly 5-to-1 margin.

The option seeing the most action is the weekly 4/24 121-strike call, where over three times as many contracts have crossed compared to the next closest option. Data hints at buy-to-open activity here, as traders bet on the equity to topple $121 by the close next Friday, when the series expires.

Speculators are grabbing these options ahead of the company's earnings release, before the open this Thursday. This may not be a bad idea, considering UNH's post-earnings price history. In the session following the company's last three reports, UNH has gained an average of 3%.

Looking back, bullish betting is nothing new among the stock's speculators. UNH's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.67 is higher than 74% of all such readings from the past year. Put simply, call buying has been more popular than normal in recent weeks.

UnitedHealth Group Inc. (NYSE:UNH) has been in a steady uptrend for over two years now, adding over 19% in 2015 alone and recently hitting a record high. It looks like short sellers are starting to get the picture. During the two most recent reporting periods, short interest has declined by over 15%.

Weekly Chart of UNH since January 2013

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements 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

The Latest Investor's Guide to Precious Metals
Learn how to protect savings and maximize returns by investing in precious metals.
Patent Lawsuit Loss Sends AMRN Stock Spiraling
Amarin just lost a major U.S. patent lawsuit for its heart drug Vascepa
RH Stock Sinks Despite Earnings Beat
J.P. Morgan Securities and Cowen and Company cut their price targets
The Latest Investor's Guide to Precious Metals
Learn how to protect savings and maximize returns by investing in precious metals.