UnitedHealth Group (UNH) has had a rough time over the past four months. Rising costs and a Federal investigation into its Medicare billing have weighed on the stock. And after an earnings miss in July, UNH hit its lowest price in over four years. But news that Warren Buffett was buying shares last week sent the stock soaring. Since the start of August, UNH has rallied over 30%, the equivalent to 3.55 standard devs. While UNH might not be out of the financial woods yet, Buffett’s confidence might pull in more buyers to keep the stock moving up. UNH’s OTM calls are trading over equidistant OTM puts, indicating that the market sees continued risk to the upside. That might be enough for a trader to consider a bullish strategy. UNH’s IV has stayed strong even after earnings, and its 40% overall IV and 35% IV rank are high enough to make short premium trades attractive. If you think UNH might continue to rally, the short put vertical that’s long the 292.5 put and short the 295 put in the September expiration with 31 DTE is a bullish strategy that collects a credit 1/3 the width of its strikes, has a 78% prob of making 50% of its max potential profit before expiry, and that generates $.76 of positive daily theta.
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