NEW DIRECTIONAL CALL PLAYS
Humana Inc. - HUM - close: 145.77 change: +1.29
Stop Loss: 142.45
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.1 million
Entry on December -- at $---.--
Listed on December 30, 2014
Time Frame: Exit prior to earnings in February
New Positions: Yes, see below
Why We Like It:
Business is destined to improve when the U.S. government is essentially forcing citizens to buy your product. The Affordable Care Act (a.k.a. Obamacare) requires people to have health insurance or pay a penalty. In 2014 the penalty was $95 per adult or one percent of your taxable annual income, whichever is greater. In 2015 that penalty rises to $325 per adult or 2% of your taxable income. Putting politics aside on Obamacare it has been a blessing for the health insurance companies with millions of new customers.
HUM is in the healthcare sector. According to a company press release, "Humana Inc., headquartered in Louisville, Kentucky, is a leading health and well-being company focused on making it easy for people to achieve their best health with clinical excellence through coordinated care. The company's strategy integrates care delivery, the member experience, and clinical and consumer insights to encourage engagement, behavior change, proactive clinical outreach and wellness for the millions of people we serve across the country."
Investors have been pretty forgiving with HUM. Back in November they missed Wall Street's earnings estimates. The stock did drop from $140 to $130 on this miss but less than two weeks later it was trading near $140 again. Investors could be betting on even more enrollments for Obamacare. The Congressional Budget Office is forecasting 13 million enrollments by the end of 2015. On a side note it doesn't hurt that HUM recently authorized a $2 billion stock buyback program to replace their $1 billion plan.
In early December shares of HUM received a couple of price target upgrades. One was for $160 and another for $165 as analysts believe HUM should grab market share in 2015. The point and figure chart is bullish and forecasting a long-term target of $173.00.
Technically we like how HUM has found support near its bullish trend of higher lows and just started to bounce. Shares displayed relative strength today with a +0.89% gain. The intraday high was $146.14. Tonight we are suggesting a trigger to buy calls at $146.35.
Trigger @ $146.35
- Suggested Positions -
Buy the FEB $150 CALL (HUM150220C150) current ask $4.20
Option Format: symbol-year-month-day-call-strike