UnitedHealth Group Soars 3.38%—Is Buffett’s Bet the Catalyst for a Comeback?

Summary
• Warren Buffett’s Berkshire Hathaway disclosed a $1.6 billion stake in UNH, sparking a 12% surge on Friday.
• UnitedHealth trades at 11x trailing earnings, a 40% discount to its five-year average P/E.
• Intraday price swung from $307.42 to $316.40, reflecting volatile investor sentiment.
• Analysts remain split: 18 Buys, 2 Holds, and 2 Sells highlight the stock’s polarizing appeal.
UnitedHealth Group’s 3.38% intraday rally has ignited a frenzy, driven by Warren Buffett’s re-entry and a valuation gap. The stock’s sharp rebound from a 52-week low of $234.6 to $314.31 underscores a potential inflection point, though operational headwinds—soaring medical cost ratios and a 40% YTD decline—cast a shadow over near-term optimism.

Buffett’s Contrarian Bet Ignites Short-Term Rally
Warren Buffett’s $1.6 billion investment in UnitedHealth Group, revealed on August 15, 2025, catalyzed a 12% surge in UNH shares—the stock’s most significant one-day gain since 2020. This move marked Buffett’s return to a company he previously liquidated in 2010, signaling a contrarian belief in UNH’s undervaluation. The stock’s 3.38% intraday gain on August 18 reflects renewed investor confidence, despite persistent challenges: medical cost ratios of 89.4%, compressed profit margins, and a 40% YTD decline. Buffett’s endorsement, coupled with hedge funds like Appaloosa Management adding to stakes, has created a psychological floor, though fundamentals remain unaddressed.

Health Care Providers & Services Sector Mixed as Elevance Trails
The Health Care Providers & Services sector saw mixed performance, with Elevance Health (ELV) rising 1.07% on August 18. However, UnitedHealth’s rally was primarily driven by Buffett’s investment rather than sector-wide momentum. Peers like Centene and Elevance have also cut 2025 guidance due to rising medical costs, highlighting structural challenges. While UNH’s rebound reflects investor optimism about its valuation, sector dynamics remain bearish, with healthcare insurers grappling with regulatory pressures and margin compression.

Options Playbook: Leveraging Volatility in a High-Beta Environment
• 200-day average: 444.73 (well below current price)
• RSI: 58.18 (neutral, suggesting potential for further consolidation)
• MACD: -5.40 (bearish divergence, but histogram shows positive momentum)
• Bollinger Bands: Price at 314.31, above the 265.53 middle band, indicating short-term bullish bias.
• Key support/resistance: 303.50–304.90 (30D support), 299.77–307.52 (200D support).
UNH’s technicals suggest a short-term bullish trend amid a long-term bearish backdrop. The stock’s 3.38% intraday gain has pushed it closer to the 315–320 resistance cluster, a critical juncture for validating the rally. For options traders, the UNH20250822C315 and UNH20250822P315 contracts stand out due to their high leverage ratios (55.91% and 43.49%) and moderate deltas (0.465 and -0.536), offering balanced exposure to directional and volatility-driven moves.
• UNH20250822C315:
- Code: UNH20250822C315
- Type: Call
- Strike Price: $315
- Expiration: 2025-08-22
- IV: 44.15% (moderate)
- Leverage Ratio: 55.91% (high)
- Delta: 0.465 (moderate)
- Theta: -1.042 (high time decay)
- Gamma: 0.02455 (high sensitivity)
- Turnover: $18.25M (liquid)
- Payoff at 5% upside: $15.50 (max(0, 329.97 - 315)).
This call option offers high leverage and liquidity, ideal for capitalizing on a breakout above $315. The high gamma ensures sensitivity to price swings, while the moderate delta balances risk.
• UNH20250822P315:
- Code: UNH20250822P315
- Type: Put
- Strike Price: $315
- Expiration: 2025-08-22
- IV: 42.62% (moderate)
- Leverage Ratio: 43.49% (high)
- Delta: -0.536 (moderate)
- Theta: -0.0417 (low time decay)
- Gamma: 0.02543 (high sensitivity)
- Turnover: $2.42M (liquid)
- Payoff at 5% upside: $0 (max(0, 315 - 329.97)).
This put option provides downside protection with high leverage. The low theta minimizes decay, while the high gamma ensures responsiveness to volatility shifts. Aggressive bulls may consider UNH20250822C315 into a bounce above $315.

Backtest UnitedHealth Group Stock Performance
The backtest of UNH's performance after a 3% intraday surge shows mixed results. While the 3-day win rate is 52.23%, indicating a moderate probability of a positive return in the short term, the 10-day and 30-day win rates are lower at 52.71% and 55.41%, respectively. This suggests that while UNH may experience a positive reaction to an intraday surge, the longer-term performance may be more variable.

Bullish Breakout or Cautionary Tale? Watch the 315–320 Threshold
UnitedHealth’s 3.38% intraday rally, fueled by Buffett’s investment, has created a short-term bullish bias, but structural challenges—soaring medical costs and a 40% YTD decline—remain unresolved. The 315–320 level is critical: a breakout could validate the rally, while a breakdown may reignite bearish sentiment. Investors should monitor Elevance Health (ELV, +1.07%) as a sector benchmark. For now, the UNH20250822C315 call offers a high-leverage play on a potential breakout, but caution is warranted given the stock’s long-term bearish trend. Watch for $315 resistance or regulatory clarity on Medicare Advantage ratings in October.