10 Updates

Interesting June Stock Options for UNH

May 12 2014, 11:41am CDT | by

Consistently, one of the more popular stocks people enter into their stock options watchlist at Stock Options Channel is UnitedHealth Group Inc (NYSE: UNH ). So this week we highlight one...

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11 weeks ago

Interesting June Stock Options for UNH

May 12 2014, 11:41am CDT | by

Consistently, one of the more popular stocks people enter into their stock options watchlist at Stock Options Channel is UnitedHealth Group Inc (NYSE: UNH ). So this week we highlight one interesting put contract, and one interesting call contract, from the June expiration for UNH.

The put contract our YieldBoost algorithm identified as particularly interesting, is at the $75 strike, which has a bid at the time of this writing of 82 cents. Collecting that bid as the premium represents a 1.1% return against the $75 commitment, or a 8.7% annualized rate of return (at Stock Options Channel we call this the YieldBoost).

Click here to find out the Top YieldBoost UNH Puts »

Selling a put does not give an investor access to UNH’s upside potential the way owning shares would, because the put seller only ends up owning shares in the scenario where the contract is exercised. So unless UnitedHealth Group Inc sees its shares decline 3.6% and the contract is exercised (resulting in a cost basis of $74.18 per share before broker commissions, subtracting the 82 cents from $75), the only upside to the put seller is from collecting that premium for the 8.7% annualized rate of return.

Interestingly, that annualized 8.7% figure actually exceeds the 1.4% annualized dividend paid by UnitedHealth Group Inc by 7.3%, based on the current share price of $77.64. And yet, if an investor was to buy the stock at the going market price in order to collect the dividend, there is greater downside because the stock would have to fall 3.56% to reach the $75 strike price.

Always important when discussing dividends is the fact that, in general, dividend amounts are not always predictable and tend to follow the ups and downs of profitability at each company. In the case of UnitedHealth Group Inc, looking at the dividend history chart for UNH below can help in judging whether the most recent dividend is likely to continue, and in turn whether it is a reasonable expectation to expect a 1.4% annualized dividend yield.

Turning to the other side of the option chain, we highlight one call contract of particular interest for the June expiration, for shareholders of UnitedHealth Group Inc (NYSE: UNH ) looking to boost their income beyond the stock’s 1.4% annualized dividend yield. Selling the covered call at the $79 strike and collecting the premium based on the $1.06 bid, annualizes to an additional 10.8% rate of return against the current stock price (this is what we at Stock Options Channel refer to as the YieldBoost), for a total of 12.3% annualized rate in the scenario where the stock is not called away. Any upside above $79 would be lost if the stock rises there and is called away, but UNH shares would have to advance 1.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 2.9% return from this trading level, in addition to any dividends collected before the stock was called.

Click here to find out the Top YieldBoost UNH Calls »

The chart below shows the trailing twelve month trading history for UnitedHealth Group Inc, highlighting in green where the $75 strike is located relative to that history, and highlighting the $79 strike in red:

The chart above, and the stock’s historical volatility, can be a helpful guide in combination with fundamental analysis to judge whether selling the June put or call options highlighted in this article deliver a rate of return that represents good reward for the risks. We calculate the trailing twelve month volatility for UnitedHealth Group Inc (considering the last 251 trading day UNH historical stock prices using closing values, as well as today’s price of $77.64) to be 20%.

In mid-afternoon trading on Monday, the put volume among S&P 500 components was 651,182 contracts, with call volume at 1.19M, for a put:call ratio of 0.55 so far for the day. Compared to the long-term median put:call ratio of .65, that represents very high call volume relative to puts; in other words, buyers are preferring calls in options trading so far today.
Find out which 15 call and put options traders are talking about today ./>

 
Update
10

7 weeks ago

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Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was told t ...
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Update
9

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Update
8

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Update
7

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KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minis ...
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Update
6

7 weeks ago

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Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the souther ...
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Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in compensat ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

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Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minis ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Ki ...
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