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Political war over the future of the Affordable Care Act is likely to rage for the foreseeable future, even if the U.S. Supreme Court appears ready to keep the program in place. President-elect Joe Biden wants to expand the program, while Tory challengers would rather see it scrapped.
The result, and the back-and-forths leading up to it, are expected to have a major effect on hospital stocks, which surged over the past week before retreating on Wednesday.
For example, the stock of community health services had climbed more than 60% since the beginning of November before falling 10% in Wednesday’s session. Options traders are betting that moves of this magnitude are likely to continue to occur rapidly in either direction until the end of the year, at least.
“[Community Health] saw five times as many calls as sell trades today, and for now, the options market implies that the stock could move 25% either way by the end of the year, “Optimize Advisors CIO Michael Khouw told CNBC on Tuesday.”
As the Supreme Court continues to hear arguments over the Affordable Care Act, these important steps are likely to continue as well. In the near future, however, some traders are betting that hospital trading is about to calm down.
“The most active options today were the [November expiration] Strike calls of 10.5, “Khouw said.” Part of that could have been profit taking as the stock rose and then fell 10% today, so they might expect a little pause before seeing some of the volatility that drove us here. . “
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