Calls Popular Ahead of UnitedHealth Group Earnings

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

by Digital Content Group

Published on Apr 13, 2015 at 11:21 AM
Updated on Jun 24, 2020 at 12:32 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

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