A Beaten-Down Stock Poised to Soar

Dear WallStreetZen Member,

This week’s Smart Leverage Alert is for Centene Corp (CNC).

Centene is one of the largest government-sponsored healthcare insurers in the country, covering Medicaid, Medicare, and marketplace plans for tens of millions of Americans. After a rough stretch that cut the stock sharply, the story now is a turnaround taking hold.

The heart of the case is margin recovery. Centene has posted stronger-than-expected margins in its core Medicaid and Medicare businesses while repricing its challenged marketplace book, and in mid-September management reaffirmed full-year adjusted earnings guidance of more than $4.80 per share. The shares have climbed well off their lows as that recovery has taken shape.

Wall Street is constructive. The analyst consensus lands on a Buy recommendation, and Zacks recently flagged it as a top-ranked stock on strong guidance and an attractive valuation.

Our Zen Ratings model agrees. CNC earns an A rating — the equivalent of a Strong Buy recommendation — placing it in the top 3% of more than 4,600 stocks, and it's the #2-ranked name in the A-rated Healthcare Plan industry.

Looking at the Component Grades behind that score, CNC ranks in the top 10% for Value, the top 9% for Momentum, and the top 9% for Growth — an attractively priced business with real price momentum and growth behind the recovery.

Our Logic

With Zen Options Essentials, we use "Smart Leverage" — Deep-In-The-Money options that let you control shares for a fraction of the cost, with your maximum risk strictly defined from day one.

The "Smart Leverage" Setup: CNC Long Call

Given the margin-recovery case and the cheap valuation behind CNC, here's how we're structuring the trade using Smart Leverage — Deep-In-The-Money calls that move nearly dollar-for-dollar with the stock, but with strictly defined risk from day one.

Instead of committing about $6,340 to own 100 shares outright, a Deep-In-The-Money Call lets you control those same shares for about $1,650.

• The Play: $50 Strike Call (Expiring Mar 19, 2027)
• Delta: 0.8258 — Right in our sweet spot. This option moves nearly dollar-for-dollar with the stock. You get the upside with significantly less capital at risk.
• Intrinsic Value: ~81% — Four-fifths of what you pay is real value, not time decay. This is what separates a Smart Leverage setup from the kind of speculative options trades that blow up amateur accounts.
• Leverage Multiple: 2.17x — Every dollar moves 2.2x harder than the stock, while the deep ITM strike still keeps meaningful downside protection versus a naked speculative call.
• The Target: For this position to double (+100%), CNC only needs to reach approximately $81.65 — a roughly 29% move in the stock that produces a 100% return on the option premium.

Why Options Over Shares?

A roughly 29% move in CNC stock would be a solid return for shareholders. In this Deep-In-The-Money option, that same move has the potential to double your investment while putting only about $1,650 at risk instead of $6,340.

That's the power of Smart Leverage: stock-like upside with a fraction of the capital and strictly defined risk from day one.

What To Do Next?

CNC  is just one of the setups our Zen Options Essentials TradeFinder identified this week.

This is powerful stuff ... 

Every week, the TradeFinder takes the highest-rated Zen stocks and matches them with options that pass the Smart Leverage Test. It looks for the best balance between opportunity and risk control. 

That means you don't have to hunt for these options trades on your own. You get a targeted list you can check in minutes, not hours. 

The idea is simple and logical, and it's not what you'll hear elsewhere ... 

Good options trades don't depend on complicated multi-leg strategies. They start with a strong stock. Then comes a simple options play with plenty of intrinsic value and liquidity. That's Smart Leverage. 

And here's the best part ... 

Your risk is defined from day one, and you still have ample room for serious upside. 

In other words, we aim to put the asymmetry in your favor. 

The Zen Ratings find the stock. Smart Leverage structures the trade. 

To see how the two work together, watch our free presentation, "Options Trading with the Zen Ratings." It shows how we turn a top-rated stock into a defined-risk options position, one simple step at a time. 

Watch: Options Trading with the Zen Ratings >>> 

Already know you want the weekly setups? Join Zen Options Essentials and get each new Smart Leverage trade as soon as the TradeFinder spots it. 

Join Zen Options Essentials >>> 

Happy Investing,

Mijusko Sibalic

Senior Writer, Zen Options Essentials

Want to get in touch? Email us at news@wallstreetzen.com.