http://www.courant.com/business/con...-affordable-care-act-1216-20151215-story.html
http://ctmirror.org/2015/12/09/unit...ing-commissions-for-obamacare-exchange-plans/
http://finance.yahoo.com/q/ks?s=UNH+Key+Statistics
http://stockcharts.com/h-sc/ui?s=unh
UNH is taking a beating on the Obamacare exchanges. It says it will exit next year. Until then it is in big trouble. It's one thing to imagine a great solution to the health care dilemma but it's another to fund it. Obama and company can't expect the insurance carriers to finance his dream. I remember Pelosi saying she really didn't know what the legislation contained, they would have to run it to see how it works. Well this is how it works.
Trade:
With UNH at 116.85
Jun 135/140 bear call spread for a net credit of $40
Yield = 40/460 = 8.7% in 179 days or 18% annualized
Prob = 90%
Expectation = .90(40) - .07(460) - .03(230) = 36.0 - 32.2 -6.9 = -3
Price................ Profit / Loss........... ROM %
88.15...................... 40.00................. 8.70%
107.22.................... 40.00................. 8.70%
127.29.................... 40.00................. 8.70%
145.00.................... 40.00................. 8.70%
145.40...................... 0.00................ 0.00%
147.36................. (195.80).............. -39.16%
150.00................. (460.00).............. -91.30%
167.43................. (460.00).............. -91.30%
187.50................. (460.00).............. -91.30%
<MAY NOT FILL AT $40>
Right now the bid/ask on the spread is 0.11/0.52 so the .40 is very optimistic and puts me in competition with the MM's.
BUT I need the $40 for an even expectation.
I will see if the OptionsXpress dark pool gives me enough advantage to get a fill. If not I will just pass this trade over and look for another.
http://ctmirror.org/2015/12/09/unit...ing-commissions-for-obamacare-exchange-plans/
http://finance.yahoo.com/q/ks?s=UNH+Key+Statistics
http://stockcharts.com/h-sc/ui?s=unh
UNH is taking a beating on the Obamacare exchanges. It says it will exit next year. Until then it is in big trouble. It's one thing to imagine a great solution to the health care dilemma but it's another to fund it. Obama and company can't expect the insurance carriers to finance his dream. I remember Pelosi saying she really didn't know what the legislation contained, they would have to run it to see how it works. Well this is how it works.
Trade:
With UNH at 116.85
Jun 135/140 bear call spread for a net credit of $40
Yield = 40/460 = 8.7% in 179 days or 18% annualized
Prob = 90%
Expectation = .90(40) - .07(460) - .03(230) = 36.0 - 32.2 -6.9 = -3
Price................ Profit / Loss........... ROM %
88.15...................... 40.00................. 8.70%
107.22.................... 40.00................. 8.70%
127.29.................... 40.00................. 8.70%
145.00.................... 40.00................. 8.70%
145.40...................... 0.00................ 0.00%
147.36................. (195.80).............. -39.16%
150.00................. (460.00).............. -91.30%
167.43................. (460.00).............. -91.30%
187.50................. (460.00).............. -91.30%
<MAY NOT FILL AT $40>
Right now the bid/ask on the spread is 0.11/0.52 so the .40 is very optimistic and puts me in competition with the MM's.
BUT I need the $40 for an even expectation.
I will see if the OptionsXpress dark pool gives me enough advantage to get a fill. If not I will just pass this trade over and look for another.
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