UNH Options Signal $350 Bull Call Play Amid DOJ Scrutiny – Here’s How to Position for Volatility

• UnitedHealth Group (UNH) fell 1% to $318.50 today, pressured by a bearish RSI (24) and MACD (-4.63) suggesting oversold conditions.

• Options data shows heavy call open interest at $350 (6,082 contracts) and $400 (3,698), while puts dominate at $300 (1,898) and $315 (1,574).

• The put/call ratio (0.468) favors bullish sentiment, but a DOJ Medicare investigation and Medicaid headwinds could extend the downtrend.

The stock is caught in a tug-of-war between technical bearishness and options-driven optimism. Here’s how to navigate it.Bull Call Play at $350 vs Bear Put Hedge at $315: What the Options Say

Let’s start with the numbers. The $350 call (OI: 6,082) and $400 call (OI: 3,698) are the most watched strikes this Friday, while the $315 put (OI: 2,312) and $310 put (OI: 2,148) dominate next week’s put activity. This isn’t random—smart money is hedging a potential rebound while capping downside risk. The put/call ratio of 0.468 (calls > puts) suggests more buyers than sellers, but don’t mistake this for a bullish signal. In a stock down 50% year-to-date, heavy call OI often reflects a desperation trade, not conviction.

Think of it like a storm. The $350 call is an umbrella—buyers are betting on a short-term rally to offset the DOJ-driven selloff. But the $315 put is the anchor. If the stock breaks below $310 (200D support at $302.88), those puts could trigger a cascade of stop-loss orders. The danger? This is a textbook bear trap setup. The market is pricing in a rebound, but fundamentals (DOJ probe, Medicaid risks) could keep the pressure on.

News Flow: DOJ Scrutiny vs Profit Hikes – Which Wins?

Here’s the rub: UnitedHealth’s recent profit forecast raise (driven by pricing power) clashes with the DOJ’s Medicare billing investigation. The stock’s 4.7% drop on October 30 was a reaction to both. On one hand, the company’s Q3 earnings beat and guidance raise are positives. On the other, the DOJ probe—focused on inflated diagnoses for Medicare payouts—threatens its core business model.

Analysts are split. Deutsche Bank downgraded UNH, citing margin risks, while UBS raised its price target to $408. This divergence reflects the market’s uncertainty. For retail traders, the key is to wait for clarity. If the DOJ investigation escalates (e.g., fines, operational changes), the $315 put could become a lifeline. If the company navigates the probe smoothly, the $350 call might see a pop.

Actionable Trade Ideas: Calls for Optimists, Puts for Pessimists

Let’s get specific. For options traders:

• Bullish Play: Buy the $350 call (expiring Friday) at $1.25. This is a high-impact strike with heavy OI. If UNH closes above $350 by Friday, the call could double.
• Bearish Play: Buy the $315 put (expiring next Friday) at $2.75. This protects against a breakdown below $310, with potential for 3x returns if the stock drops to $300.

For stock traders:

• Entry at $315: If UNH holds above $310 (200D support), consider buying dips near $315. Target $325 (Bollinger Middle Band) or $340 (30D support at $343.80).
• Stop-Loss at $305: If the stock breaks below $310, exit immediately. The 200D support at $302.88 is a critical level to watch.

Volatility on the Horizon: Positioning for the Unknown

The next few weeks will test UNH’s resilience. The DOJ investigation is a wildcard—regulatory fines could force a sell-off, but a clean bill of health might spark a rebound. Meanwhile, the Medicaid headwinds and leadership instability (CEO resignation, AI leak) add layers of uncertainty.

For traders, this is a high-risk, high-reward scenario. The $350 call is a short-term bet on a bounce, while the $315 put is a hedge against a deeper decline. The key is to avoid overexposure. Use small position sizes and tight stops.

Final Takeaway

UnitedHealth is a stock in transition. The options market is pricing in a potential rebound, but fundamentals suggest caution. If you’re bullish, the $350 call offers a concentrated play. If you’re bearish, the $315 put provides downside protection. Either way, keep a close eye on the DOJ’s next move and the stock’s reaction to $310 support. In a market this volatile, patience is your best ally.