A Top-Rated AI Chip Play on the Discount Rack

Dear WallStreetZen Member,

This week, our Smart Leverage Alert centers on ON Semiconductor (ON).

They are a global leader in power and sensing chips, the components that manage electricity inside electric vehicles, industrial systems, and increasingly AI data centers. It’s a high-quality franchise, and right now it’s on sale.

This is a pullback story, not a chase. After a strong run, the stock has slid to roughly $70 — nearly 50% below its 52-week high — as the market frets over soft near-term EV demand. But that selloff has pushed a top-rated chipmaker to an attractive valuation just as the business pivots toward a much bigger opportunity.

That opportunity is AI. In its early-November quarter, the company beat expectations, with earnings growing four times faster than revenue, and its AI data-center business is exploding — up roughly 140% this year and guided to double again in 2027 as its silicon-carbide power chips win slots in platforms like Google’s.

Wall Street is on board, with the analyst consensus rating ON a Buy and meaningful upside to their price targets.

Our Zen Ratings model agrees. ON earns an A rating — the equivalent of a Strong Buy — placing it in the top 4% of more than 4,600 stocks, and it’s the #6-ranked name in the Semiconductor industry.

Behind that score, ON ranks in the top 19% for Value, the top 14% for Growth, the top 10% for Financials, and the top 9% for our AI factor — cheap, growing, financially strong, with quant signals pointing to recovery ahead.

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: ON Long Call

Given the strong fundamental case and the discounted valuation in ON, 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 $6,961 to own 100 shares outright, a Deep-In-The-Money Call lets you control those same shares for about $2,241.

• The Play: $52.50 Strike Call (Expiring May 21, 2027)
• Delta: 0.8181 — 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: ~78% — The vast majority 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: 1.56x — Every dollar works harder for you than the stock, while the deep ITM strike keeps meaningful downside protection versus a naked speculative call.
• The Target: For this position to double (+100%), ON only needs to reach approximately $95.15 — a roughly 36% move in the stock that produces a 100% return on the option premium.

Why Options Over Shares?

A roughly 36% move in ON 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 $2,241 at risk instead of $6,961.

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?

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

And the best part? You don't need to spend hours doing research to find these trades. The TradeFinder does the heavy lifting — scanning for Deep-In-The-Money options with the optimal Delta, the right Intrinsic Value, and the right Leverage Multiple — so you can evaluate a trade like this in minutes.

How is that possible?

Because the best options trades aren't about picking exotic strategies or timing the market perfectly. They're about finding great stocks…and using Smart Leverage to control your risk while amplifying your upside.

EXACTLY what the Zen Ratings model is built to find.

EXACTLY what this methodology has been delivering.

If you'd like to see how this entire methodology works, start by watching our presentation, "Options Trading with the Zen Ratings." It walks through the Smart Leverage framework, the TradeFinder, and how we identify these opportunities step by step.

Options Trading with the Zen Ratings >

Or, perhaps you are ready to start using Smart Leverage by becoming a Zen Options Essentials member. Click below to join: 

Zen Options Essentials >

Happy Investing,

Mijusko Sibalic

Senior Writer, Zen Options Essentials

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