UnitedHealth Group Surges 3.96%—Is This a Desperate Rally or a Contrarian Setup?

Summary
• UnitedHealth Group (UNH) surges 3.96% intraday to $250.52, rebounding from a 52-week low of $234.60.
• Earnings forecast misses expectations by 21.5%, with adjusted EPS guidance slashed to $16 from $20.91.
• Options chain shows 2025-08-15 call options at 245/247.5 strikes dominate trading volume, signaling bullish bets.

UnitedHealth Group’s 3.96% intraday rebound has ignited a frenzy of speculation as the stock trades near its 52-week low. The surge follows a disastrous earnings report, CEO transition, and a DOJ investigation, yet options traders are aggressively buying calls ahead of the August 15 expiration. With the stock trading at a 11.7x forward P/E—well below the S&P 500’s 25x—investors are debating whether this is a contrarian opportunity or a death spiral.

Earnings Miss and Rising Costs Fuel Sell-Off
UnitedHealth’s 3.96% intraday rebound masks a deeper crisis: the stock has lost half its value in 2025 due to a 43% earnings decline, rising medical costs, and a 89.4% medical care ratio (up from 85.1% a year ago). The company’s new CEO, Stephen Hemsley, slashed full-year guidance to $16 adjusted EPS from $20.91, citing uncontrolled healthcare inflation. Patients resuming post-pandemic treatments and surgeries have spiked utilization rates, particularly in Medicare Advantage and Medicaid segments. Meanwhile, a DOJ investigation into potential antitrust violations adds regulatory risk, with shares now trading at a 13x forward P/E—well below its 11-year average of 18x.

Healthcare Sector Mixed as Cigna Gains, UNH Struggles
The broader healthcare sector remains volatile, with Cigna (CI) rising 1.64% on improved Medicaid enrollment data. However, UnitedHealth’s struggles highlight structural weaknesses in the industry: rising medical costs, regulatory scrutiny, and margin compression. While Cigna benefits from stable Medicaid growth, UNH’s exit from unprofitable Medicare Advantage markets and its 3.96% intraday rebound suggest a divergent path. The sector’s 1.64% gain contrasts sharply with UNH’s 50% 2025 decline, underscoring the stock’s unique challenges.

Bullish Call Options and ETFs to Watch in a Volatile Setup
• 200-day average: 458.44 (far above current price)
• RSI: 23.71 (oversold)
• MACD: -16.06 (bearish divergence)
• Bollinger Bands: Price at $250.52, near lower band of $240.33

UnitedHealth’s technicals paint a bearish picture, but options traders are betting on a short-term rebound. The 2025-08-15 245 call (UNH20250815C245) and 247.5 call (UNH20250815C247.5) stand out: both have high leverage ratios (24.43% and 28.68%), moderate delta (0.63 and 0.58), and strong gamma (0.0206 and 0.0216). With implied volatility at 42.08% and 41.61%, these options offer liquidity (turnover of 2.09M and 375K) and time decay (theta of -0.376 and -0.382).

UNH20250815C245:
• Code: UNH20250815C245
• Strike: $245
• IV: 42.08% (high)
• Leverage: 24.43% (high)
• Delta: 0.63 (moderate)
• Theta: -0.376 (high decay)
• Gamma: 0.0206 (high sensitivity)
• Turnover: 2.09M (liquid)
• Payoff at 5% upside: $111.02 (max(0, 263.04 - 245))
• Why it stands out: High leverage and liquidity make this a top pick for aggressive bulls expecting a rebound above $263.

UNH20250815C247.5:
• Code: UNH20250815C247.5
• Strike: $247.5
• IV: 41.61% (high)
• Leverage: 28.68% (high)
• Delta: 0.58 (moderate)
• Theta: -0.382 (high decay)
• Gamma: 0.0216 (high sensitivity)
• Turnover: 375K (liquid)
• Payoff at 5% upside: $117.95 (max(0, 263.04 - 247.5))
• Why it stands out: Slightly higher leverage and gamma make this ideal for a breakout above $263, with strong time decay favoring quick moves.

If $263 breaks, UNH20250815C247.5 offers explosive upside. Aggressive bulls may consider UNH20250815C245 into a bounce above $263.

Backtest UnitedHealth Group Stock Performance
The backtest of UnitedHealth Group's (UNH) performance after a 4% intraday surge shows favorable short-to-medium-term gains. The maximum return during the backtest period was 1.21%, which occurred on day 50, suggesting that while the stock may experience some volatility, it has a tendency to recover and even exceed its pre-surge levels.1. UNH's Resilience: Despite the significant intraday surge, UNH's performance exhibits resilience with a maximum return of 1.21% observed on day 50, indicating a typical recovery pattern after such events.2. Short-Term Fluctuations: The backtest highlights that short-term fluctuations are common, with a peak return during the 50th day, suggesting that investors should be prepared for potential volatility in their portfolios.In conclusion, while UNH is prone to short-term volatility, its performance tends to recover over a medium-term horizon, with the potential to exceed previous levels. This characteristic is crucial for investors assessing the stock's resilience post-surge.

Bullish Breakout or Dying Rally? Here’s What to Watch
UnitedHealth’s 3.96% intraday rebound is a fragile spark in a sea of bearish fundamentals. While the stock trades at a 13x forward P/E and 11.7x dynamic P/E, its 89.4% medical care ratio and DOJ investigation suggest a prolonged slump. Technicals remain bearish (RSI at 23.71, MACD at -16.06), but options traders are betting on a short-term bounce. Sector leader Cigna (CI) rose 1.64%, highlighting divergent paths in healthcare. Watch for a break above $263 or a breakdown below $240.33 (Bollinger lower band) to confirm the next move. For now, the 2025-08-15 245/247.5 calls offer high-leverage bets on a desperate rally.