http://www.courant.com/business/con...-affordable-care-act-1216-20151215-story.html http://ctmirror.org/2015/12/09/unit...ing-commissions-for-obamacare-exchange-plans/ http://finance.yahoo.com/q/ks?s=UNH+Key+Statistics http://stockcharts.com/h-sc/ui?s=unh UNH is taking a beating on the Obamacare exchanges. It says it will exit next year. Until then it is in big trouble. It's one thing to imagine a great solution to the health care dilemma but it's another to fund it. Obama and company can't expect the insurance carriers to finance his dream. I remember Pelosi saying she really didn't know what the legislation contained, they would have to run it to see how it works. Well this is how it works. Trade: With UNH at 116.85 Jun 135/140 bear call spread for a net credit of $40 Yield = 40/460 = 8.7% in 179 days or 18% annualized Prob = 90% Expectation = .90(40) - .07(460) - .03(230) = 36.0 - 32.2 -6.9 = -3 Price................ Profit / Loss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ight now the bid/ask on the spread is 0.11/0.52 so the .40 is very optimistic and puts me in competition with the MM's. BUT I need the $40 for an even expectation. I will see if the OptionsXpress dark pool gives me enough advantage to get a fill. If not I will just pass this trade over and look for another.
UNH As soon as I submitted my order the MM's dropped their ask from .52 to .37... Just under my .40 So they don't want to give me that order. Nice to see that they're awake. So I'll scratch this trade since I don't want to go into a negative expectation to get filled.