Humana Plummets 7% Amid Guidance Cut and Sector-Wide ACA Subsidy Fears – What’s Next for HUM?

Summary
• Humana (HUM) slumps 6.96% to $262.24, its worst intraday drop since March 2020
• Company slashes 2025 GAAP EPS guidance to $12.26 from $13.77, citing Medicare Advantage membership declines
• ACA subsidy expiration looms over healthcare sector, with UnitedHealth (UNH) down 0.98%
• Options frenzy: 2025-11-14 put options on 255 strike see 58.22% price surge

Humana’s sharp selloff reflects a perfect storm of earnings disappointment and sector-wide anxiety over Affordable Care Act (ACA) subsidy expiration. With the stock trading near its 52-week low and technical indicators flashing bearish signals, investors are scrambling to assess whether this is a buying opportunity or a deeper correction. The healthcare plans sector faces mounting pressure as ACA enrollees brace for premium spikes, compounding Humana’s own strategic challenges.

Guidance Cut and Membership Woes Spark Flight to Safety
Humana’s 7% decline stems directly from its revised 2025 GAAP EPS guidance, which now targets $12.26 versus the prior $13.77. The update follows a 425,000-member decline in Medicare Advantage enrollment—narrower than feared but still a red flag. Management attributed the cut to lower-than-expected retention in individual Medicare Advantage plans, despite improved sales. The move signals underlying pressure in its core insurance segment, where a 91.1% benefit ratio aligns with expectations but masks margin compression. Meanwhile, the broader healthcare sector is rattled by ACA subsidy expiration risks, with patients like Stacy Cox and Beth Dryer highlighting the human cost of potential premium hikes. This dual threat—revenue headwinds and regulatory uncertainty—has triggered a liquidity crunch in HUM options.

Healthcare Plans Sector Under Fire as ACA Fears Intensify
The healthcare plans sector is in freefall as ACA subsidy expiration debates dominate Washington. UnitedHealth (UNH), the sector’s bellwether, fell 0.98% despite its own robust Q3 results, reflecting systemic anxiety. Insurers face a dual challenge: near-term margin pressures from membership declines and long-term uncertainty over ACA premium tax credits. With 22 million ACA enrollees at risk of double-digit premium hikes in 2026, the sector’s earnings visibility is eroding. Humana’s membership struggles mirror broader industry trends, as rising healthcare costs and regulatory headwinds compress profit margins across the board.

Options Playbook: Capitalizing on HUM’s Volatility and Sector Weakness
• 200-day MA: 262.81 (slightly above current price)
• RSI: 64.24 (neutral but trending lower)
• MACD: 2.57 (bearish crossover with signal line at 3.35)
• Bollinger Bands: Price at 262.24 (near lower band at 261.01)

Technical indicators suggest HUM is in a short-term bearish phase despite a long-term bullish bias. The stock is trading near its 200-day moving average and lower Bollinger Band, with RSI indicating potential oversold conditions. For traders, the key levels to watch are the 261.01 support (lower band) and 283.01 pivot (middle band). A break below 261.01 could trigger a test of the 251.16 intraday low, while a rebound above 283.01 might attract short-covering buyers.

Top Options Plays:
• HUM20251114P255 (Put, 255 strike, Nov 14 expiry):
- IV: 40.65% (moderate)
- LVR: 56.27% (high leverage)
- Delta: -0.369 (sensitive to price moves)
- Theta: -0.037 (moderate time decay)
- Gamma: 0.0216 (high sensitivity to price swings)
- Turnover: $59,548 (liquid)
- Payoff at 5% downside (249.13): $5.87 per contract
- This put offers asymmetric upside with high gamma and leverage, ideal for a 5-7% correction.

• HUM20251114C270 (Call, 270 strike, Nov 14 expiry):
- IV: 42.99% (moderate)
- LVR: 72.02% (high leverage)
- Delta: 0.314 (moderate directional exposure)
- Theta: -0.546 (aggressive time decay)
- Gamma: 0.0192 (moderate sensitivity)
- Turnover: $55,479 (liquid)
- Payoff at 5% downside (249.13): $0 (out of the money)
- A high-risk, high-reward call for those betting on a rebound above 283.01 pivot.

Action Alert: Aggressive bears should prioritize HUM20251114P255 for a 5-7% downside target. Bulls should wait for a retest of the 261.01 support before initiating longs.

Backtest Humana Stock Performance
Hi, I’ve completed the data pull and ran the screening logic you requested:1. Downloaded all daily OHLC data for Humana (HUM.N) from 2022-01-01 through 2025-11-05. 2. Examined every session to see whether the day’s intraday low fell 7 % or more below the previous day’s close (low ≤ prior-close × 0.93). 3. No trading days met that −7 % intraday-plunge definition during the period.Because the event list is empty, the event-backtest engine has nothing to evaluate and therefore throws an error. Functionally, that means HUM has not experienced a ≥7 % intraday drawdown (relative to the prior close) at any point since the start of 2022.Next steps – please let me know which you prefer:• Lower the threshold (for example −6 %, −5 %, or −3 %) to see if meaningful events appear. • Extend the look-back further (pre-2022). • Switch to a close-to-close drop threshold instead of intraday low. • Any other adjustment you have in mind.Happy to rerun the analysis once you decide how you’d like to proceed.

HUM at Crossroads: Sector Weakness vs. Long-Term Bullish Fundamentals
Humana’s 7% drop reflects immediate sector headwinds but masks its long-term strategic momentum in CenterWell and Medicaid growth. While the stock remains vulnerable to ACA subsidy debates and Medicare membership volatility, its 8.8x dynamic P/E suggests undervaluation relative to sector peers. UnitedHealth’s 0.98% decline underscores the sector’s fragility, but HUM’s options activity indicates short-term volatility may peak by Nov 14. Investors should monitor the 261.01 support level and sector leader UNH’s performance—break below 261.01 could trigger a deeper correction, while a rebound above 283.01 might reignite bullish momentum. For now, the path of least resistance is down, but long-term holders may find value near the 52-week low of 206.87.