Put Spread on CI on 2/7/2014

Cigna Corporation (CI) provides insurance and related products and services in the United States and internationally.

The company's Commercial segment offers insured and self-insured medical, dental, behavioral health, vision, and prescription drug benefit plans, health advocacy programs, and other products and services. Its Government segment offers Medicare Advantage plans to seniors in 13 states and the District of Columbia, Medicare Part D plans in all 50 states and the District of Columbia, and Medicaid plans.

The company's Group Disability and Life segment provides group long-term and short-term disability insurance, group life insurance, and accident and specialty insurance. Its Global Supplemental Benefits segment offers supplemental health, life, and accident insurance products, as well as offers individual Medicare supplement plans that provide retirees with federally standardized Medigap-style plans.

The company's Run-off Reinsurance segment manages its run-off reinsurance coverage for risks written by other insurance companies under life and annuity policies and accident policies under guaranteed minimum death benefits and minimum income benefits contracts. Its Other Operations segment provides corporate owned life insurance that are permanent insurance contracts sold to corporations to offer life coverage for certain employees, as well engages in run-off settlement annuity business.

The company distributes its products and services through insurance brokers and insurance consultants or directly to employers, unions, and other groups, as well as through the Internet.

Cigna reported earnings today that fell short of expectations.  Cigna reported Q4 adjusted EPS $1.39 vs. consensus $1.57 - Cigna reported Q4 revenue $8.15B vs. consensus $8.09B. On the news, shares fell below the $80 support level. The next support is expected to be around $74.

52-Week Trading Range: $55.97 - $90.63

Last Trade: $78.00

Here is the trade: 

Trade Buy 1 March $80.00 Put at $3.80 Sell 1 March $75.00 Put at $1.50 For a net debit of $2.30 Profit/Loss Analysis Breakeven at $77.70 Maximum profit is $270.00 at strike of $75.00 Maximum loss is ($230.00) at strike of $80.00 Closing Summary Sold 1 March $80.00 Put at $4.30 Bought 1 March $75.00 Put at $1.45

Position closed on 3/14/2014 at price of $2.85 with a 23.91% gain in 35 days.

Updates

3/14/2014 3:11:30 PM

We are taking profits on CL put spread. 

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