Elevance Health Plummets 2.74% Amid Legal Scrutiny and Insider Selling – Is the Bottom Near?

Summary
• Elevance Health (ELV) drops 3.15% to $349.33, its lowest since November 2025
• Legal investigation by Bronstein, Gewirtz & Grossman triggers investor caution
• Insiders sold $3.5M in shares over the past year, raising governance concerns

Elevance Health’s stock is under intense pressure as a securities fraud investigation and insider selling collide with mixed market sentiment. The stock’s 3.15% intraday plunge has pushed it closer to key support levels, while technical indicators suggest a potential reversal. Investors are now weighing the impact of regulatory risks against the company’s long-term digital transformation narrative.

Legal Scrutiny and Governance Concerns Spark Flight to Safety
The sharp selloff in Elevance Health’s stock is driven by a securities fraud investigation launched by Bronstein, Gewirtz & Grossman, LLC, targeting potential corporate wrongdoing by the company and its executives. This follows a year of insider selling totaling $3.5 million, with no insider purchases in the past three months. While the firm highlights AM Best’s credit rating upgrades and AI-driven healthcare initiatives, the legal uncertainty and governance red flags have overshadowed these positives. Investors are now reassessing risk exposure as the stock trades near its 52-week low of $273.71.

Healthcare Sector Volatility: UnitedHealth Group (UNH) Trails ELV’s Decline
The broader healthcare sector is under pressure, with UnitedHealth Group (UNH), the sector leader, down 2.64% intraday. While ELV’s selloff is more pronounced, the sector-wide weakness reflects investor caution around regulatory risks in the insurance space. UNH’s decline suggests systemic concerns about ACA and Medicaid policy uncertainties, which also weigh on Elevance’s long-term margin projections.

Options and ETF Plays for a Volatile ELV: Navigating the Bearish Bias
• 200-day average: 357.41 (above)
• RSI: 76.44 (overbought)
• MACD: 6.63 (bullish divergence)
• Bollinger Bands: 308.50–360.22 (near upper band)

Technical indicators suggest ELV is overbought but trapped in a long-term range. The 200-day moving average at $357.41 acts as a critical resistance level, while the lower Bollinger Band at $308.50 offers a potential floor. A breakdown below $334.36 (middle Bollinger Band) could trigger a test of the 52-week low. For leveraged ETFs, the sector’s underperformance makes XME (Healthcare Select Sector SPDR) a relevant proxy, though its liquidity is limited.

Top Options Contracts:
• ELV20260116P350 (Put): Strike $350, Expiry 2026-01-16, IV 24.81% (moderate), Leverage 34.98% (high), Delta -0.477 (moderate bearish), Theta -0.0277 (slow decay), Gamma 0.0155 (moderate sensitivity).
• ELV20260116C350 (Call): Strike $350, Expiry 2026-01-16, IV 30.47% (moderate), Leverage 27.37% (high), Delta 0.523 (moderate bullish), Theta -0.3094 (rapid decay), Gamma 0.0126 (moderate sensitivity).

ELV20260116P350 offers a high leverage ratio (34.98%) and moderate delta (-0.477), ideal for a bearish scenario. With a projected 5% downside to $331.86, the put’s payoff would be $18.14 per contract. ELV20260116C350 is a speculative call with a high theta (-0.3094) and moderate delta (0.523), suitable for a rebound above $350. Aggressive bears should prioritize the put, while bulls may consider the call as a hedge if the stock stabilizes above $340.

If $334.36 breaks, ELV20260116P350 offers short-side potential. Aggressive bulls may consider ELV20260116C350 into a bounce above $350.

Backtest Elevance Health Stock Performance
The iShares Core S&P U.S. ETF (ELV) has demonstrated resilience following a -3% intraday plunge. Over 3 days, the win rate is 52.84%, with an average return of 0.11%. Over 10 days, the win rate is 52.63%, with a slight negative return of -0.01%. Over 30 days, the win rate increases to 56.42%, with a maximum return of 0.17% on day 2. These results suggest that ELV tends to recover from significant intraday drops, although returns may vary in the short term.

Act Now: ELV at Pivotal Crossroads—Break Below $334.36 to Trigger Short-Side Play
Elevance Health’s stock is at a critical juncture, with technical indicators and legal risks converging to test its resilience. A breakdown below $334.36 (middle Bollinger Band) could accelerate the selloff toward $308.50, while a rebound above $350 would signal short-term stabilization. Investors should monitor the sector leader UnitedHealth Group (UNH), which is down 2.64%, for broader industry cues. For immediate action, prioritize the ELV20260116P350 put for a bearish bet or the ELV20260116C350 call for a speculative long. Watch for a decisive move below $334.36 to confirm the bearish thesis.