Oscar Health was losing what made the stock special. Then a peer reported awful news...

Oscar Health is down double digits in early trading in response to health insurance giant Centene pulling its full-year guidance yesterday, a sharp reversal of the run that had seen the stock gain over 50% in 10 sessions.

While we’ve noted that Oscar had some fundamental and fundamental-adjacent factors going for it — strong top-line growth, talking up the use of AI as integral to its operations, and a Kushner as a cofounder and board member — this was always mostly a flows story, plain and simple.

People were talking about it and buying the stock and call options hand over fist.

Call options volumes set records in back-to-back sessions two weeks ago amid a ramp in volumes. The stock then traded sideways (with high volatility) from June 20 through the end of the month.

The put/call ratio on Oscar (bearish versus bullish options volumes) spiked yesterday ahead of Centene yanking guidance, with the number of puts changing hands at a one-day record. Volumes — and call demand — had already stopped crescendoing.

The company went from being one of the most mentioned tickers on the r/WallStreetBets subreddit, per SwaggyStocks, to outside the top 25 over the past day and week.

Barclays, for its part, thinks the party’s over. Analyst Andrew Mok initiated coverage with an “underweight” rating, saying “speculative retail interest” drove the shares higher and put a $17 price target on the stock.

Now, there’s a catalyst that may cause some to question the previously bullish narrative after an actuarial firm told Centene everything it thought about how its business would be doing is wrong.

Instead, however, it looks like the swoon in the shares is just being treated as an opportunity to buy the dip via the options market: just a half an hour into the session, call volumes have already hit their 20-day average, a period that begins a bit before the huge spike in demand in the back half of June.

And for the most active contract, calls that expire on July 11 with a strike price of $18, the activity is overwhelmingly taking place on the “ask” side of the trade — that is, the lowest price a seller will accept compared to the bid, the highest price a buyer is willing to pay.

This points to motivated buyers stepping in to bet that either Centene’s pain won’t have much in the way of fundamental impact for Oscar, or that others will join them in bidding up the stock back to its recent highs or beyond.