UnitedHealth Group Inc (NYSE: UNH) closed Thursday's trading session at $54.40. In the past year, the stock has hit a 52-week low of $49.82 and 52-week high of $60.75. UnitedHealth Group (UNH) stock has been showing support around $52.67 and resistance in the $55.39 range. Technical indicators for the stock are Bullish and S&P gives UnitedHealth Group (UNH) a positive 4 STARS (out of 5) buy rating. For a hedged play on UnitedHealth Group (UNH), look at the Mar '13 $55.00 covered call for a net debit in the $53.10 area. That is also the break-even stock price for this trade. This covered call has a duration of 57 days, provides 2.39% downside protection and an assigned return rate of 3.58% for an annualized return rate of 22.91% (for comparison purposes only). A lower-cost hedged play for UnitedHealth Group (UNH) would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the UnitedHealth Group (UNH) Jan '14 $38.00 call and selling the Mar '13 $55.00 call for a total debit of $15.40. The trade has a lifespan of 57 days and would provide 1.84% downside protection and an assigned return rate of 10.39% for an annualized return rate of 67% (for comparison purposes only). UnitedHealth Group (UNH) has a current annual dividend yield of 1.59%.
MarketIntelligenceCenter.com