UNH – UnitedHealth Group, Inc. – The diversified health and well-being company has experienced a share price decline of 3.5% to $26.12. Despite the erosion in the price of the stock today we noticed a bullish play in the July contract. One investor looks to have sold 10,000 puts at the July 24 strike price for a premium of a dollar apiece in order to finance the purchase of 10,000 calls at the higher July 27 strike for 1.36 each. The net cost of the transaction amounts to 36 cents and yields a breakeven point at $27.36. In order to profit by expiration, shares of UNH would need to rally by approximately 5%.
USO – United States Oil Fund LP – Shares have remained relatively flat today at $37.37 and we observed a mixture of bullish and bearish plays on the fund. Bullishness came in the form of a calendar spread initiated by one investor looking for significant upside on the stock by expiration in October. The spread involved the sale of 10,000 calls at the in-the-money July 37 strike price for 2.45 apiece against the purchase of 10,000 calls at the higher October 42 strike for 2.25 per contract. The trader looks to have originally bought the calls at the July 37 strike on May 28th for an average premium of 1.90 each. Today he reeled in profits of 55 cents by selling the calls for 2.45. He was effectively able to reduce the cost of rolling his position forward to the October 42 strike to just 1.70 apiece. This individual will amass profits on the bullish stance if shares can rally 17% to the breakeven point at $43.70 by expiration. In contrast to such medium-term bullishness, another trader took a bearish stance in the nearer-term July contract. This individual looks to have sold 2,000 calls at the July 38 strike price for 1.85 each in order to purchase 2,000 puts at the same July 38 strike for a premium of 2.50. The net cost of shedding calls to get long of puts amounts to 65 cents and yields a breakeven point to the downside at $37.35. Shares of the USO would need to fall more than 2 cents from the current price in order for this bear to begin to amass profits on the reversal.
MNKD – MannKind Corporation – The biopharmaceutical company’s shares have rallied sharply by more than 15.5% to $8.17 today after the firm announced that it has commenced clinical development of a next-generation inhalation system. The system reportedly optimizes the delivery of drug powders based on the proprietary Technosphere technology platform. MNKD’s inhalation system is indicated for such therapeutic proteins as the investigational ultra rapid acting insulin, AFRESA Inhalation Powder. Option investors were seen banking gains on the bullish movement in the stock. The June 7.5 strike price saw some 2,600 in-the-money calls sold for 1.15 apiece while the higher June 10 strike had 1,200 calls sold for 35 cents each. Further along at the July 7.5 strike price, 2,400 in-the-money calls afforded a premium of 1.38 per contract to traders who sold the options. Option implied volatility on MNKD began the trading day at 110% but has since eroded down to 91%.
POT – Potash Corporation of Saskatchewan, Inc. – The fertilizer and feed products company’s shares are lower by more than 1.5% today to stand at $111.50. Bearish investors were seen bracing for continued downward movement in the stock through expiration in July. Some 15,000 protective puts were purchased at the July 95 strike price for 3.69 apiece. Pessimistic traders long the puts will begin to amass profits to the downside given declines of 18% in the stock. These individuals begin to amass profits at the breakeven point located at $91.31. Further evidence of bearishness was the sale of 2,000 in-the-money calls at the July 110 strike price for a premium of 9.68 apiece spread against the purchase of 2,000 puts at the lower July 105 strike for 7.00 each. The investor who enacted this trade receives a net credit of 2.68. The 2.68 pocketed will grow as additional profits to the trader if shares decline below $105.00 by expiration. Option implied volatility on the stock rose up to 65% today from Friday’s average volatility reading of 57%.
