CVS Health Skyrockets 1.64%, Can This Bullish Momentum Sustain?

Summary
• CVS Health (CVS) surges 1.64% to $63.32 amid Q2 earnings beat and raised 2025 guidance
• Company reports $98.9B revenue (up 8.4%) and $1.81 adjusted EPS (vs. $1.46 est)
• Aetna’s 39% operating income growth and Caremark retention drive optimism
• Intraday range of $63.01-$66.92 highlights volatile trading amid sector uncertainty

CVS Health’s shares are riding a post-earnings wave as the healthcare giant navigates a pivotal transition under new leadership. With a 39% YTD rally and a 52-week high of $72.51 within reach, today’s 1.64% gain reflects strong conviction in its strategic realignment. The stock’s sharp intraday rebound from a 63.01 low to 66.92 high underscores market validation of management’s pivot toward integrated health solutions.

Earnings Beat and Strategic Clarity Ignite Bullish Sentiment
CVS Health’s 1.64% surge stems from a combination of Q2 outperformance and revised 2025 guidance. The company delivered $98.9B in revenue (up 8.4%) and $1.81 adjusted EPS, exceeding estimates. CEO David Joyner’s emphasis on Aetna’s 39% operating income growth and Caremark’s market-leading retention rates signaled operational stabilization. Strategic moves like the Rite Aid acquisition and digital health innovations further reinforced long-term value. Despite GAAP EPS declining due to litigation charges, the 15% increase in adjusted operating income demonstrated core business resilience, fueling investor optimism.

Options Playbook: Leveraging Volatility with Gamma-Driven Contracts
• 200-day average: 60.68 (below current price) | RSI: 38.21 (oversold) | MACD: -1.45 (negative but stabilizing)
• Bollinger Bands: 58.02–68.78 | 30D support/resistance: 66.55–66.76 | 200D support/resistance: 66.48–67.01

CVS is trading at a 4.5% discount to its 30D MA but above its 200D MA, suggesting short-term undervaluation. The RSI at 38.21 indicates oversold conditions, while the MACD histogram (-0.27) suggests bearish momentum is waning. Bollinger Bands show a 63.40 midline with a 10.76% range, highlighting volatility. Key levels to watch: 66.55 (30D resistance) and 66.48 (200D resistance).

• CVS20250808C62
- Call option, strike $62, expiring 2025-08-08
- IV: 35.97% (mid-range) | Leverage: 30.80% | Delta: 0.636 | Theta: -0.0737 | Gamma: 0.1051 | Turnover: 1.04M
- IV: Market volatility anchor | Leverage: 30.80% amplifies directional moves | Delta: 0.636 balances sensitivity | Theta: -0.0737 shows significant time decay | Gamma: 0.1051 indicates strong price responsiveness | Turnover: 1.04M ensures liquidity
- This contract offers optimal leverage (30.80%) with moderate delta (0.636) for a 5% upside scenario. Projected payoff: $3.16 per share (vs. $1.64 gain in cash). High gamma (0.1051) ensures rapid premium acceleration if the stock breaks 62.00.

• CVS20250808C63
- Call option, strike $63, expiring 2025-08-08
- IV: 33.93% (mid-range) | Leverage: 44.78% | Delta: 0.527 | Theta: -0.0753 | Gamma: 0.1182 | Turnover: 393K
- IV: Balanced volatility | Leverage: 44.78% enhances returns | Delta: 0.527 provides directional exposure | Theta: -0.0753 shows meaningful time decay | Gamma: 0.1182 indicates strong responsiveness | Turnover: 393K supports liquidity
- This contract offers 44.78% leverage with a 52.7% delta, ideal for a 5% upside scenario. Projected payoff: $2.66 per share (vs. $1.64 in cash). High gamma (0.1182) ensures rapid premium gains if the stock moves above 63.00. Both contracts benefit from a projected 5% upside to $66.49, with CVS20250808C62 showing 194% projected return and CVS20250808C63 at 162%.

Backtest CVS Health Stock Performance
The backtest of CVS's performance after an intraday surge of at least 2% shows mixed results. While the 3-day win rate is 52.47%, indicating a majority of days with a positive return, the 10-day win rate is slightly lower at 52.31%, and the 30-day win rate is 48.01%, suggesting that longer-term performance is more volatile.

Act Now: Target $66.55 Resistance for Next Leg Higher
CVS’s 1.64% surge reflects strong conviction in its strategic pivot and earnings resilience. With RSI at oversold levels and Bollinger Bands showing a 10.76% range, technicals favor further upside. The 66.55–66.76 30D resistance zone is critical; a break above 66.55 would confirm a bullish reversal. Sector-wise, watch UnitedHealth (UNH) at -5.03% to gauge broader healthcare sentiment. Aggressive bulls should consider CVS20250808C62 into a break above 66.55, while conservative players can target 63.40 midline support. If 63.01 retests, consider short-dated puts for downside protection.