Option Witch | UnitedHealth Is Expected to Show a 7% Swing Post-Earnings, Two High-Volatility Strategies in Focus!

UnitedHealth, one of the prominent players in the health insurance space, is scheduled to announce its second-quarter earnings on July 29. The stock has dropped 43.8% year-to-date, hit by several issues, including the suspension of its guidance, escalating medical costs, and a leadership shakeup that included the sudden departure of its CEO, Andrew Witty.

Wall Street analysts expect the company to report earnings per share of $4.48, representing a 34% decrease year-over-year. Meanwhile, revenues are expected to increase by 13% from the year-ago quarter to $111.5 billion.

Recent News Ahead of Q2

On July 24, UnitedHealth Group revealed in an SEC filing that it is under formal investigation by the Department of Justice (DOJ) over its Medicare billing practices. The company said it is cooperating with both civil and criminal probes into whether it improperly raised patient diagnoses to secure higher payments from the government.

J.P. Morgan analyst Lisa Gill remains optimistic ahead of UnitedHealth’s earnings, viewing the DOJ probe as part of a broader industry trend. She maintained an Overweight rating on the stock, expecting a potential rebound despite near-term uncertainty.

Heading into the Q2 print, Deutsche Bank analyst George Hill lowered his price target to $328 from $362 but reiterated a Buy rating. The analyst noted that investor sentiment “has deteriorated significantly” due to a series of unfavorable news. The top-rated analyst lowered his estimates, citing ongoing concerns around Optum Health, the company’s healthcare services unit.

Options Traders Anticipate a 7% Move

The expected move for UNH options expiring on Aug 01, 2025 (4 days) (w) is ±$21.41 (7.6%), with a price range of $260.25 - $303.06.

Source: OptionCharts

Call open interest expiring this Friday totals 72,194, while puts stand at 42,790 — indicating a bullish tilt among options traders.

Source: OptionCharts

1. Long Straddle (High Volatility Play)

• Structure: Buy 280-strike call + Buy 280-strike put (Aug 1 expiry).

  $UNH Straddle 250801 280.0C/280.0P$

• Cost: ~$22.4 per straddle

• Breakeven:

• Upside: $302.4 (+7.6%)

• Downside: $257.6 (-9%)

  Source: Tiger Trade App

  Analysis:

• Unlimited profit potential if UNH moves beyond ±7.3%.

• Captures volatility expansion (IV = 52.3% pre-earnings; likely to spike further).

• High premium at risk if UNH remains flat (IV crush post-earnings).

Strategy 2: Strangle with OTM Strikes (Lower Cost)

• Structure: Buy 260-strike put + Buy 300-strike call (Aug 1 expiry).

  $UNH Strangle 250801 260.0P/300.0C$

• Cost: ~$8.15 per strangle

• Breakeven:

• Upside: $308.08 (+9.6%)

• Downside: $251.92 (-11.5%)

  Source: Tiger Trade App

  Analysis:

• Cheaper than straddle.

• Requires a bigger move (~9%) for profitability.