The political battle for the future of the Affordable Care Act is likely to erupt in the near future, even when the U.S. Supreme Court seems ready to hold the program in place. President-elect Joe Biden wants to expand the program, while conservative skeptics would prefer to scrap it.
The result, and the back-and-forth that leads to it, is likely to have a significant effect on hospital stock shares, which have risen in the last week before being withdrawn on Wednesday.
For example, the stock of Community Health Services rose more than 60% since early November before falling 10% in Wednesday’s session. Options traders bet that moves of this magnitude are likely to continue to get thicker and faster in any direction until the end of the year, at least.
“[Community Health] I saw five times more calls as puts transaction today, and now is the options market implies “The stock could move 25 percent one way or the other by the end of the year,” Optioize Advisors CIO Michael Khouw told CNBC on Tuesday.Fast money“
As the Supreme Court continues to hear arguments about the Affordable Care Act, these important moves are likely to continue as well. In the near future, however, some traders are betting that the hospital trade is going to cool.
“The most active choices today were [November expiration] “10.5-strike calls,” Khouw said. Some of them could have made a profit as the stock rose and then fell 10% today, so they can wait a while before we see any of the instability that has led us here. “