Today’s tickers: UNH, USO, MNKD, POT, X, MCD, PALM, S & JPM
UNH – 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%. – UnitedHealth Group, Inc.
USO – 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. – United States Oil Fund LP