360° Coverage : Interesting June Stock Options for UNH

2 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 interesting...

Filed under: news

 
 
 

16 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
2

4 days ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of 20,000 by 30 p ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

5 days ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 and MH17" hits home ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

No link between Ebola outbreaks in West Africa, DRC : WHO
Geneva, Sep 3 (IANS) The World Health Organisation Tuesday said the outbreak in Democratic Republic of Congo (DRC) is "a distinct and independent event", with no relationship to the epidemic in West Africa.
 
 
US CDC calls for global response against Ebola
Washington, Sep 3 (IANS/EFE) The head of US Centers for Disease Control and Prevention (CDC) Tuesday warned of the risk that the Ebola outbreak could get out of control without a greater worldwide response.
 
 
US doctor tests positive for Ebola in Liberia
Washington, Sep 3 (IANS) An American missionary doctor working in Liberia has tested positive for the Ebola virus, his organisation SIM USA announced Tuesday.
 
 
IS video shows beheading of second US journalist
Washington, Sep 2 (IANS) Days after the beheading of American photojournalist James Foley, Sunni militant group Islamic State (IS) has posted a video showing the beheading of another kidnapped American journalist Steven Sotloff, CNN reported.
 
 
 

Latest from the Network

No link between Ebola outbreaks in West Africa, DRC : WHO
Geneva, Sep 3 (IANS) The World Health Organisation Tuesday said the outbreak in Democratic Republic of Congo (DRC) is "a distinct and independent event", with no relationship to the epidemic in West Africa. Based on...
Read more on Business Balla
 
US warplanes drop leaflets on Iraqi city
Baghdad, Sep 3 (IANS/EFE) US warplanes Tuesday dropped thousands of leaflets on the northern Iraqi city of Mosul, urging residents to keep clear of places occupied by the Islamic State (IS) extremist group that overran...
Read more on Politics Balla
 
US CDC calls for global response against Ebola
Washington, Sep 3 (IANS/EFE) The head of US Centers for Disease Control and Prevention (CDC) Tuesday warned of the risk that the Ebola outbreak could get out of control without a greater worldwide response. "This is...
Read more on Business Balla
 
Don't have a perfect body: Charlize Theron
Los Angeles, Sep 3 (IANS) Actress Charlize Theron says she doesn't have an ideal figure, but is happy with the way her body looks. The actress features on the cover of Modern Luxury's September 2014 issue and looks...
Read more on Celebrity Balla
 
Kate Hudson is 'basically married'
Kate Hudson says she and Matthew Bellamy are ''basically married.'' The 35-year-old actress, who has son Bingham, three, with the Muse frontman, 36, admits they're in no rush to plan to a wedding and she rarely wears...
Read more on Celebrity Balla
 
Cee Lo Green's reality show is axed
Cee Lo Green's reality TV series has been axed. TBS announced on Tuesday (09.02.14) that the 'Forget You' hitmaker's show, 'The Good Life,' which focused on his attempts to juggle his careers as a producer, recording...
Read more on Celebrity Balla
 
Chris Martin spends weekend with Gwyneth Paltrow
Chris Martin and Gwyneth Paltrow spent the weekend together in the Hamptons. The former couple, who announced they were ''consciously uncoupling'' in late March after 10 years of marriage, reunited at their home in the...
Read more on Celebrity Balla
 
Mali mine blast kills four UN peacekeepers
Bamako, Sep 3 (IANS) Four United Nations peacekeepers were killed and 15 others injured after their vehicle hit a landmine in Mali Tuesday, security sources said. The UN vehicle was hit by a landmine when the...
Read more on Politics Balla
 
Kate, Cara new faces of Burberry's latest fragrance
London, Sep 3 (IANS) Supermodels Kate Moss and Cara Delevingne have been roped in as the new faces of Burberry's latest fragrance. The models are pictured in the campaign for the label's latest scent My Burberry, shot...
Read more on Celebrity Balla
 
Former Israeli PM on trial again for corruption
Jerusalem, Sep 3 (IANS) Israel's former Prime Minister Ehud Olmert appeared before a Jerusalem court Tuesday after the state prosecution reopened a corruption case against him. Olmert was acquitted in what came to be...
Read more on Politics Balla