27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Benzinga's PreMarket Prep airs every morning from 8-9:00 a.m. ET. During that fast-paced highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.
On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.
For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.
Stock Of The Day: UnitedHealth Group
When an issue is trading wildly in one direction or another, it's important to identify the catalyst for the move and act accordingly. Is it a short-term news driven catalyst that only has a short-term impact or is it a long-term fundamental catalyst that may have long-term implications?
An excellent example of this is the price action of UnitedHealth Group Inc (NYSE:UNH) in Wednesday's session.
With the upcoming election getting into full swing with the results of Super Tuesday being a major victory for Joe Biden, it was also a major victory for health care stocks. First of all, it diminished the chances of Bernie Sanders getting the Democratic nomination and in turn. As a result, his Medicare-For-All proposal, which would have destroyed issues in the sector, may be a thing of the past.
See Also: Biden's Super Tuesday Surge Gives Health Care Stocks A Boost
Price Action Since The Market Implosion
Just as the broad market has suffered over the past few weeks, so has the share price of UnitedHealth. Just 11 trading sessions ago, it made a new all-time high at $306.73 and all-time closing high at $305.31. Amidst the retreat in the broad market, the issue bottomed on Friday at $245.30.
It was able to meander as high as $280.35 on Tuesday before faltering to close just off its low for the session at $261.40.
Huge Sigh Of Relief, But Be Careful
With Biden's victory secured overnight, buyers sprang into action at 4 a.m. onset of pre-market trading, leaping $14 higher and never looking back. By the 9:30 a.m. open, it was trading over $290.
When the issue was being discussed on the show, both hosts cautioned against chasing the issue on the long-side. It was as simple as recognizing all the buyers trapped from the last few weeks that were not going to "look a gift horse in the mouth" (better known as the overhead supply theory). While it was good news for the company and sector, it was not an important fundamental catalyst such as an earning beat and or raised guidance.
Co-host Dennis Dick desired to short the issue and was hoping the issue filled the void in price action from Feb. 21, when it bottomed the previous day at $298.61 and peaked the following day at $288.99.
Unfortunately for him, the issue rallied only to $295.84 and is trading in the mid-$280 handle as of 11 a.m.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
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