UNH is a potential buy under $400, supported by A+ profitability and a fair market value 26% above current price, making it a good long-term hold.

So UNH uh let's look at uh poor man's covered call. So first thing I'm going to do is I'm going to pull up uh I'm going to pull up Seeking Alpha and I'm going to pull up UNH. Now um United Health Group, you guys are all familiar with this.

This fly is back. Um UNH profitability is an A+.

Um, unh uh profitability A+, valuation is a C, growth is a D minus. Um, it's got a hold rating on on Seeking Alpha. I I think when anytime we see UNH under that uh that 400 level is a potential buy.

It's up 30% per um over the last year. Fair market value on on uh investing.com is showing at 503 which is 26% above its current price. So uh it pays a nice dividend. You know this is an easy stock to just get behind and and purchase and hold for the long term.

But we're going to look at a poor men's cover call and how we might set that up. So, let's go out to our options chain. We're going to go to the chain. First thing we're going to do is we're going to look for a long call.

We've got a dividend coming out September 14th. We see no earnings on the calendar. We're going to go out at least a year. So, let's go to December 17th of of of uh 2027. Now, typically the typical way that people set up or mans cover call is to buy the 90 delta.

Now, this is very smart because if you buy a a delta that is too low, say you're buying, let's just find where we are here. So, we're looking at the delta column, which is this this column right here.

Uh, when we're looking at this, this is the one I have selected, the 290 call, which would cost $12,000 to buy. Uh, the the delta on this is 0.9. What it means is if if the stock goes up then the stock can make or sorry this option makes 90 cents for every dollar that the stock rises.

It loses 90 cents for every stock or every dollar that the stock drops. Now I saw a video recently somebody buying like 99 delta positions. I'm like what what are we doing here?

Like that's not giving us any advantage whatsoever. Like buying a 99 delta just gives us the full risk of the stock. You might as well just buy the stock. With options, what we're doing is we're getting a little bit uh creative with our potential.

We're we're saying, can we take less risk? And this definitely does. This has a max loss of $12,827 comparatively to the max loss of 39 uh $39,000 that could incur if the UNH was to drop to zero from 397 and I held 100 shares.

This gives me a a 90 delta position. And we can see what this profit profile looks like. It's like, oh, the stock goes up. We make tons of money. If the stock was to go to $500, which is what um investing.com was showing, and we did that at expiration, this $12,000 position would return $9,74.

This can be quite quite lucrative. Now, it has negative theta decay. Buying a leap. It's not a huge amount of theta. So, this would could be played as a short duration play or it could be traded uh just just held like this. and we could sell a call against this.

Let's go to the chains and we'll we'll go to a a shorter duration. So, let's go out to September and say let's even go further than that. Let's look at the October 2nd and say how much money can I can I collect if I was to say sell the 420.

Um well, in this case, I collect about 550 bucks. Now, we've got to keep this relative. So when I'm looking at this value 550, I am always relating it to the strike. So this is an important thing to take a look at.

We're going to look at these two columns here, the strike and the the we're just going to look at the the bid price. We're just going to assume that that's what we're getting because that's what the current bid is.

So what we're what we want to identify first off is we want to identify which line which row and which strike is producing 1% over this time frame. Whatever the time frame is it doesn't matter.

I just want to know so I have some sort of relative base on this. So in this case the 440 is closer to 4 425. If you look at the 405 it's like 1050. That's way off. You know 855 to 410 again way off.

We're looking for the one that's closest. If we go to 279 compared to 435 again way off. There's only one on here and we need to find that in this case it is the 425. This is gives us our baseline.

This is 1%. If we focus everything on 1% then it's an easy calculation to say okay how long a time frame is this? So this is this is 38 days. That means that this is going to occur approximately, you know, 9.7 times per month, per year, I might be able to put this trade on.

So, if I was to collect slightly more than 1%. This is giving me about a 12% return annually. That is an okay um trade to take. Let's look at the delta. Now, the next thing that I would want to look at is the delta.

This is only a 23% chance of being out of the money. So typically with covered calls, what we're looking for is we're looking for a reduced risk to the downside. We reduce our risk by collecting uh a bigger premium.

We collect bigger premium by selling closer to at the money in this case. And typically we would look for the 30 delta, which is the 420. And that's the one I chose. You know, again, this is where that Ry was telling me the other day about how quickly I can do it.

I want you guys to be able to recognize the things that I am seeing on these chains. So when you look at this, when you look at this chain, the first thing that I'm looking for is I am looking for the relative value.

Now, now when I see the stock is at 397, I don't even have to look at the the strikes in the middle. All I'm looking at is the ask. I just look, this is the only column that I look at because I know that if I get down, if I'm selling an out of the money call that's 330 that there's that's not even close to 1%.

I've already checked my time frame. I've already gone out to this close to 45 days to expiration. I have no earnings to deal with. But at 330 is is not even 1% of 397. So, I know I need to get better than that.

This is slightly better. This is the the trade that I want to consider. So now I can look at my simulator. How much money could I make make on this? So one of the things to take note is our our theta is positive on this trade.

So we have a we have a max return. We have a max return of uh $1,200 or so here. A max profit uh $2446 or $2,400. And again we're at a um max loss of 12 12,700. So it is a considerable return on capital.

It's also a 54% probability of profit. Now I can increase my probability of profit and decrease my max profit by just dragging this along. And this is where platforms like Mumu or Option Strat can significantly increase our our potential uh of finding really great trades because all we can do is now we we've kind of got the ballpark area but now we can tweak this a little bit.

This has a max profit of 1300. Probability of profit is 62% a max loss of 11,000. So there's less risk, smaller max profit, higher probability. If I wanted to take this, this is the selling the 400.

That's basically at the money. It really depends on where I am in the cycle. This is where I go back and I look at the chart and I really decide, you know, where do I think this stock is going to go?

If I think it's going to go back up to 420, which it could easily, um, then then I want to be more aggressive with this. I I I want to have more potential. More aggressive is more potential.

So, 55% probability, $2,100 max profit, max loss, 12,000, uh, positive theta of about 12 bucks a day. Uh, this is the type of trade that I would want to take. Now, one another thing that we can do is we can sell these as spreads and and they can work out.

So, selling the 400, what if I was to go back and I was to just purchase uh what if I was to just purchase uh the 415. So, I do this as a spread. If we go back to that simulator now, I my max profit is now unlimited.

So, if I really wanted to be bullish, this is the type of trade that I would want. my theta decay is still very very low but slightly negative and and this is again where we we talked about like how do we get slightly better theta decay.

Um this trade still even though it looks like a small amount is $600 return if the stock was just to stay at 400. So it it the break even's 393 on this trade. These are these are ways to kind of manipulate um and get long so to speak.

Now we can increase these contracts as well. This this is a very viable way to trade this if we got a strong move to the upside. This would be giving me a decent return. If say the stock just jumped up over the next couple of days to 424 bucks.

This makes $1,600. My max loss is only 11,000. I'm actually taking less risk by taking this on. My theta is still slightly negative. So, I don't get a lot of movement from time decay, but I'm giving myself a position where uh I do end up getting some theta decay out of this.

And this is where we just play around with these these spreads and these strikes and say, "Okay, how, you know, here's a little more potential. There we go. Here's a trade. I've got $12,000 max loss, but again, I've got max profit of unlimited."

So, it depends on where I want to do. Poor man's covered call does not have to be capped profits. selling a call spread or multiple call spreads can dramatically uh change the trade to give it a much bigger delta bias.

So, this has got 79 delta to the to the long side. Um, easy money.

I own SpaceX shares at 144 and sold a covered call expiring September 4th at a 145 strike collecting $630 in premium. Congratulations. What are your thoughts on managing the position to maximize my potential return?