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Mike Khouw's UnitedHealth Options Trade

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Mike Khouw's UnitedHealth Options Trade

Mike Khouw spoke on CNBC's "Options Action" about a bullish options trade in UnitedHealth Group Inc (NYSE: UNH). He loves the company because of its consistent earnings growth over a lengthy period of time and he thinks its valuation is cheap, given its growth.

UnitedHealth's implied volatility is currently elevated because the company is going to report earnings on Wednesday and also because of the election so Khouw wants to use a diagonal spread to make a trade.

Khouw wants to buy the January $340 calls for $15.50 and sell the November $350 calls for $6. The trade is going to cost him $9.50 and if the stock closes below $350 at the November expiration, Khouw is going to own the January $340 call with the breakeven price at $349.50.

 

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