Options Volume Peaks as Health Insurers Get Crushed

Options volume is hitting new highs during the ANTM and UNH sell-offs

by Josh Selway

Published on Apr 12, 2019 at 2:32 PM

There's been a lot going on in the healthcare sector lately, and the uncertainty is weighing on a number of stocks in the space. In fact, the Health Care Select Sector SPDR ETF (XLV) is off another 0.5% today at $90.17, and two specific names joining in on the weakness are Anthem Inc (NYSE:ANTM) and UnitedHealth Group Inc (NYSE:UNH). Both are seeing increased options activity, as well.

Option volume on ANTM today is around 17,500 contracts, already blowing past the former 52-week high of 13,000 from March. This volume has been mostly driven on the call side, with these options more than doubling puts so far, accounting for the top seven contacts overall. Most popular has been the May 260 call, followed by the May 270 and 280 calls. These latter two contracts appear to have been used in some type of spread trade.

This call activity only mirrors the recent approach seen from Anthem options traders. Specifically, the security's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 2.38, and ranks in the 86th annual percentile. Said differently, call buying has been unusually popular.

The health insurer was last seen trading down 5.9% at $259.86, giving up support at the 200-day moving average and set for its lowest close since January. Right now, ANTM stock is pacing for an 11.5% weekly drop, which would be its worst weekly performance in over 10 years.

antm stock price

Option volume is also at fresh 52-week highs on UNH, though the trading as been more split between calls and puts, with the former leading the latter 29,000 to 19,000. Coming in as the two most popular options are the April 227.50 call and put, which have seen an almost identical amount of volume so far -- hinting at some type of advanced options strategy.

Like its sector peer, options activity on UnitedHealth was dominated by call buying before today, based on the 10-day call/put volume ratio of 2.90 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- just 4 percentage points from a 12-month high.

Turning to the charts, today's price action has UNH shares dangerously close to a fresh annual low, last seen trading down 4.4% at $225.14. The equity's losses for the week are similar to ANTM's, as it's set to give back 11.3% -- also marking its worst weekly performance in more than a decade. This comes as the company prepares to report earnings next Tuesday, April 16.

unh stock price

 


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