Trading Insights
Humana Earnings Turn Bearish Trader into Millionaire Overnight
Yesterday, Market Rebellion identified unusual options activity in Humana, forecasting a massive drop. Today, those options are soaring.
The date is Wednesday, January 24th, 12:16PM…
and one trader’s life is about to change, forever.
They’ve got a hunch about a stock market event that’s about to happen tomorrow morning, and they’re facing a big decision: Act on what they think will happen next, or let another opportunity pass them by. That event: Humana’s quarterly earnings. It’s an event that happens every three months — but this time, something’s different.
News from insurance companies like United Healthcare have begun rolling out during their most recent earnings reports. And while some of those companies have exceeded their earnings estimates, it didn’t matter. Their stocks plunged for one massive reason:
Medical costs as a share of premium are soaring.
Those costs are at the basis of these insurance companies’ bottom line — and that means it could be a very tough year ahead for United Healthcare, and more importantly, Humana.
Using roughly a quarter million hard earned dollars, this trader prepares to act. They could choose to short the stock directly — but they want leverage for this trade. So they turn to the best instrument in the finance market for providing big bearish leverage: OTM, short-dated put options. With Humana trading at $404.16, this trader purchases 2,400 out of the money puts at the $385 strike expiring in two days. This is a bold bet, because if in the next two days, Humana rises, stays the same price, or even falls less than 4.7%, these options will expire completely worthless. It’s a daring endeavor, but in the click of a mouse, it’s an endeavor this trader has committed to.
Unusual options activity alerted by Market Rebellion at 12:16PM ET
Fast forward: After one sleepless night spent lying in anticipation of tomorrow’s earnings, the sun has risen, and the news is out.
Humana shares are plummeting.
In the blink of an eye, upon the release of Humana’s earnings, billions of dollars evaporate from Humana’s market cap. Healthcare bulls are left scrambling, as the news reverberates across the entire sector, hitting UNH again, Cigna, CVS, Centine, Molina, and more — all struck down for multiple percent on the day.
However, in the stock market, one man’s pain is another man’s gain. And for this trader, that gain meant a life-changing sum of money. Those put options, bought only 24 hours before for as low as $0.95 cents per contract soared to a value as high as $40.45 — nearly $10 million dollars.
As a reference point, that trade could have turned $950 into more than $40,000 overnight.
This is why Market Rebellion puts such a massive emphasis on monitoring, reporting, and following unusual options activity. Because here’s the plot twist — we don’t know who placed this trade. Maybe it was someone with a hunch, as we said prior. Or maybe, just maybe, this trader was acting on information that individual traders don’t have access to. Perhaps this wasn’t life changing money at all. Perhaps this was a bet using loaded dice. We don’t know — and we likely never will. But for traders who track unusual options activity, that’s unimportant. The only thing that matters is that this trader was willing to stake a massive sum of money on a very specific outcome which probability says shouldn’t have happened; but did. Unusual options activity has an interesting habit of foretelling future market events, and this wouldn’t be the first time that we’ve seen a UOA trade go parabolic overnight. We’ve seen massive OTM bets that hours later predicted entire company buyouts at exactly the max profit point of the trade. We’ve seen colossal UOA in biotech companies that would soon be made an offer they couldn’t refuse. We’ve seen earnings bet after earnings bet after earnings bet forecast specific predictions about a stock’s price that came true.
Want to get in on the action? Unlock the unusual options activity that we’re seeing every day, complete with trade ideas crafted by professional options traders, and more.
Try Market Rebellions unusual options activity today.
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- 1 Primary Trade Idea + Bonus Trades Per Week
- 1 LIVE Weekly Webinar
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- Pete Najarian's UOA Playbook
- VIP Friday Virtual Cocktail Hour
See Terms of Use for details.
UOA Pro
- 10+ Trade Ideas Per Week
- 3 LIVE Weekly Webinars
- LIVE Q&A Session With Lead Instructor Bill Johnson
- Q&A Sessions
- PLUS All Essential Features
Full 30-day money back guarantee on annual subscriptions. See Terms of Use for details.
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995
/year
Billed Annually at $995
- 1 Primary Trade Idea + Bonus Trades Per Week
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Full 30-day money back guarantee on annual subscriptions. See Terms of Use for details.
UOA Pro
$
3,495
/year
Billed Annually at $3,495
- 10+ Trade Ideas Per Week
- 3 LIVE Weekly Webinars
- LIVE Q&A Session With Lead Instructor Bill Johnson
- Q&A Sessions
- PLUS All Essential Features
Full 30-day money back guarantee on annual subscriptions. See Terms of Use for details.
UOA Essential
- 1 Primary Trade Idea + Bonus Trades Per Week
- 1 LIVE Weekly Webinar
- Member Forum
- Weekly Newsletter
- Pete Najarian's UOA Playbook
- VIP Friday Virtual Cocktail Hour
- SAVE 58% Annually
Full 30-day money back guarantee on annual subscriptions. See Terms of Use for details.
UOA Pro
- 10+ Trade Ideas Per Week
- 3 LIVE Weekly Webinars
- LIVE Q&A Session With Lead Instructor Bill Johnson
- Q&A Sessions
- PLUS All Essential Features
Full 30-day money back guarantee on annual subscriptions. See Terms of Use for details.