$UNH: Beat, raised, raised again. Still sold. Here's my sell put pick.
UnitedHealth closed Thursday at $395.36, down 3.42% (−$14.02). It opened at $412.20 and fell below $400 by the close. That is about 14% under its 52-week high of $461.62.
Why it fell
1. Medical cost fear is back. Investors worry that patients are using more care, which squeezes the profit UNH keeps from premiums. On the Q3 call, management said cost growth in its commercial (employer) plans is running above the 11% it first assumed. That is the soft spot.
2. A risk-off day. Nasdaq fell more than 5% and the semiconductor index fell 12%. A defensive Dow stock with a 0.62 beta still got sold with everything else.
What Q3 actually said (Oct 13)
• Adjusted EPS $4.69 vs $4.14 expected ($2.92 a year ago)
• Revenue $112.69B vs $111.40B expected, but down from $113.16B a year ago
• Medical care ratio (MCR, share of premiums paid out in claims) 88.4% vs 89.9% a year ago
• Without the $610M reserve release (earlier cost estimates turned out too high), MCR is about 89.1%. So nearly half the improvement came from reserves, not operations.
• Full-year 2026 guidance raised to at least $20.50 (was $19.50–20). That is the third raise this year.
• People served fell by 85K on Medicaid eligibility changes. Management calls 2026 the trough year for Medicaid margins.
• P/E about 23× trailing and about 17.5× forward. Dividend $9.06 a year (~2.2%), ex-dividend Dec 7.
How I read it as a put seller
The business is getting better. The market is pricing one risk, commercial costs, ahead of January's guidance. I don't need to call the bottom. I only need UNH above my strike on Dec 18.
My checklist
✅ Trend: price is ~12% above the 200-day (~$351.84)
✅ Earnings: next report January 2027, after expiry
❌ Volatility: IV is about 29–31%, IV rank about 10–24, and IV is only about 1.1× realised volatility. The premium is cheap by my rules.
✅ Delta: solved to about 0.17
Strike math (42 days to Dec 18)
• 1 standard deviation ≈ $354
• 200-day × 0.98 ≈ $345
• $345 has a delta of only ~0.09, too far out to be worth selling, so I move up.
• $360 put ≈ $3.90 (model estimate at 31% IV)
• Break-even ≈ $356, about 10% below Thursday's close
• Roughly 80% model odds of expiring worthless
The plan
• Sell 1× Dec 18 $360 put at half size (the volatility check failed)
• Cash needed: $36,000 per contract
• Take profit: GTC buy-back at about $1.95 (50%)
• Stop: about $9.75 (2.5× the credit), one roll at most
• Go to full size only if IV gets back above 35%
The chart says yes. The volatility says go small.
Personal framework, education only, not advice. Premiums are Black-Scholes estimates, not live quotes. Check your own options chain before trading. Options carry risk, including assignment.
#UNH #UnitedHealth #SellPut #Options #WheelStrategy
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