The Fortune 500 index classifies the 500 largest companies in the country per income. Third on the list, in follow -up only of Walmart and Amazon, is the largest health insurer in the country, United. The company had a hard blow recently. At the end of last year, the CEO of the company’s Unitedthian subsidiary was shot dead when he entered the Hilton in Midtown to present a conference. The company has missed the profits and reduces advice in April. On Tuesday, the CEO resigned “for personal reasons”, the company suspended directives only a month after having reduced it. The average price objectives of 12 months of analysts, more than $ 640 per share earlier this year, dropped more than 30% to $ 438. Then, after the closure Wednesday, the fire responsible for all this smoke was revealed when the Wall Street Journal reported a criminal investigation for a possible fraud in Medicare by the Ministry of Justice. The action dropped by 15% more Thursday, making it the most efficient action of the S&P 500 this year. When a company with long and successful history is seriously weakening, we must ask ourselves questions to help establish whether the crisis is existential, persistent, prolonged or temporary: is a secular change in industry threatening the company? Think of the blockbuster video before Netflix enters the existing image. Has there been an unusual cycle that would not be repeated? A “pig in a python” scenario – think of Pfizer and Moderna with stylish / prolonged vaccines. Was the company fraudulently cooked books? Think of Enron or Worldcom – existing. Has the company creatively “massaged” its finances with creative accounts? Consider General Electric during the Jack Welch / Jeff Immell – persistent / prolonged. Is this an evaluation problem where the price and the fundamentals divergent? Think of Amazon in the late 1990s and the first aughts. The share price dropped by 95%, a peak of hollow, while income doubled – temporary. Is the company faced with massive legal or regulatory problems that will considerably harm the company? Think of tobacco, pg & e or Boeing – persistent / prolonged. More bad news is possible. The company insists that it did nothing wrong and said that the Doj had not informed it of the reported investigation. While the leaders insisted on a conference on Tuesday on a conference call to have the intention and expect to return to the previous margins and the growth objectives, it seems unlikely that all these damage can be erased in the short term, and the prices of the options, already raised on a heavy volume this week, should increase even more now. Uncertainty caused a sharp drop in the course of action, a peak in options. A possible criminal survey aggravates the dangers facing the opposites that seek to take a formerly formidable business with cheap. It is always difficult to try to catch a falling knife. But as the two graphs above reveal, 1) a margin of net income of 4% is a conservative reference hypothesis, and 2) the only time the UNH exchanged much cheaper than it was at the moment within the time 1999/2000 and during the great financial crisis. Could the stock resume these multiple or even lower? Of course, this shows how depressed the course of the action is. One way to take advantage of the depressed stock market course combined with average well-being options is to rely a risk of appeal / propagation, as follows. However, remember that this is a speculative long -term bet. The trade: Buy on June 1, 27 265 $ Call SELL June 1 June 27 $ 300 Call SELL June 1, June 27, 240 $ Put elsewhere, if you have the stock and you want a small botter without adding to a downward risk, consider covering your long stock with 1×2 call deviations at zero cost. Disclosure: All opinions expressed by CNBC Pro contributors are only their opinions and do not reflect the opinions of CNBC, NBC Universal, their parent company or affiliated, and may have been previously broadcast by them on television, radio, Internet or other support. The above content is subject to our general conditions and our privacy policies. This content is provided for information purposes only and does not consider financial, investment, tax or legal advice or a recommendation to buy a warranty or another financial asset. The content is general and does not reflect the unique personal circumstances of person. The above content may not suit your special situation. Before making financial decisions, you should strongly consider asking your own financial or investment advisor for advice. Click here for the complete non-responsibility clause.
Use of options to exchange the sale in unitedhealth shares
