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Humana faces short-term bearish play

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Humana took a big hit on Obamacare-related concerns after the presidential election, and one trader is positioning for more potential losses this week.

optionMONSTER's Depth Charge scanners detected the purchase of 2,000 December 62.50 puts at the same second for $0.15 on Friday with just 20 minutes left in the session. The volume was 5 times higher than the strike's open interest of 400 contracts at the beginning of the day, indicating that this is a new position.

HUM slipped 1.14 percent on Friday to close at $66.11. The stock gapped down from above $76 to the $70 level on Nov. 7 with a downgrade by Goldman Sachs to "sell" from "neutral" based on the health-care company's high Medicare exposure after President Obama's reelection. Shares fell below several key moving averages at that time and have been trending lower since.

Friday's puts weren't tied to any stock trading found by optionMONSTER's scanners that day, but they could have been bought to hedge a long position opened earlier. If not, the puts would be making a straight bearish bet that HUM will drop roughly 6 percent by expiration at the end of this week. (See our Education section)

The company is scheduled to present at the JP Morgan Healthcare Conference on Jan. 8. Fourth-quarter results are to be reported on Feb. 4.

Total option volume in HUM was triple its daily average in the last month. Puts outnumbered calls by 11 to 1, a reflecting the day's bearish sentiment.

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