UnitedHealth Group (UNH) is facing a significant decline, with shares now below $295. This drop comes from disappointing earnings and negative news about Medicare reimbursement rates. The stock is unstable right now, so caution is essential for potential investors. Buying at this moment could be a risky move. Important technical levels are being closely monitored. The first key point is $272.00, where a gap created in August could serve as a support level and may attract buyers. If selling pressure continues, the stock could drop to $235.00. This level could form a double bottom, offering a better risk-reward scenario. These price points might appeal to traders looking for a recovery. Despite the troubling news, these specific levels might provide chances for engagement once the situation stabilizes. Reflecting on the big sell-off in early 2025, UnitedHealth faced significant losses due to poor earnings and negative Medicare news. As predicted, the stock later recovered after filling the technical gap around $272. The lowest point was near the $235 support level that summer, creating a substantial opportunity. Currently, with the stock recovering, the situation has shifted, but the memory of the volatility lingers. Recent government data shows a slight slowdown in Medicare Advantage enrollment growth for Q4 2025, limiting the stock’s upward momentum. This change is causing implied volatility to rise gradually, which makes options pricing more appealing for both buyers and sellers. For those holding long positions, this is a prime opportunity to consider buying protection. We suggest purchasing out-of-the-money put options with March or April expirations to guard against fresh regulatory concerns. A drop below last quarter’s support level of $325 could happen swiftly if negative news resurfaces. On the other hand, if you believe the fears are exaggerated, the increased volatility offers a chance to earn income. Selling cash-secured puts at lower strike prices, such as $310 or $300, allows us to collect premium. This strategy is profitable if the stock remains above these levels until expiration. We should also prepare for a sudden downturn, guided by the playbook from 2025. If the market reverses and UNH drops decisively below $300, we will view that as an opportunity to invest in long-dated call options. The previous support levels at $272 and $235 are crucial psychological barriers that institutions will likely defend again.

here to set up a live account on VT Markets now