Humana Options Jump on Takeover Talk

Humana is up more than 7 percent Friday and seeing heavy call activity, amid rumors of a takeover by Aetna .

More than 26,500 HUM calls traded in the first hour of the day at various strikes, according to OptionMonster's tracking systems. That's nearly six times the average daily call volume for the health care provider in 60 minutes.

HUM stock was up as much as 16 percent to $26.75 by mid-morning but has fallen back to $24.75, still up some 7.33 percent on the day but less than half of its 52-week high of $51.85. Near-term price targets for Humana are in the range of $32 to $38 per share, but we're hearing some rumors of buyout bids of up to $40.

Investor Education:

Managed care companies in general have outpaced the rest of the market in recent days after being hit hard on concerns over regulatory changes under the Obama administration's health care reform initiatives. Some analysts, however, believe that many of these names have been oversold.

Investor Tips:

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Rivals in Sickness & Health:

Cigna

Unitedhealth Group

WellPoint

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Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.

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