UnitedHealth shares are doing something unusual ahead of earnings

The only thing more expensive than health insurance is perhaps the costs of insuring shares of health insurers. Case in point: UnitedHealth Group, which reports earnings Tuesday.Implied volatility is running at twice realized volatility ahead of the October 13 quarterly earnings release. In other words, options prices - the cost of insuring the underlying stock - are expensive, which sets up well for short premium strategies. In the case of UnitedHealth shares, traders can sell November premium to cut the cost of a longer-dated January call by more than half. UnitedHealth heads into Tuesday's report with much of the damage from its prior missteps already priced in. While rising healthcare costs always remain a headwind, management's 13% to 16% EPS growth target looks achievable. The stock has basically been flat over the last five years. By the way, according to the company, 90% of United's 52 million customers worldwide are in the U.S. By its own statistics, the company covers about 12% to 13.5% of the U.S. population. Growing enrollment is critical to EPS growth, but so too is underwriting margin. In the managed care and health insurance business, underwriting margin represents t...