A Turnaround Wall Street Just Upgraded

This week’s Smart Leverage Alert is focused on Petrobras (PBR).

Petroleo Brasileiro (better known as Petrobras) is the state-controlled energy giant that explores for, produces, and refines oil and gas across Brazil and around the world. It's one of the largest producers in the Western Hemisphere, and its latest results show a business firing on all cylinders.

On August 6, Petrobras reported adjusted earnings of $1.60 per share, beating the $1.40 estimate, and more than doubling the $0.75 it earned in the same quarter a year ago. That's the kind of profit growth you rarely see from a company this size … and the market has taken notice, sending the stock up roughly 48% over the past year.

Our Zen Ratings model confirms the strength. PBR earns a B rating, which amounts to a Buy recommendation, landing in the top 6% of more than 4,600 stocks. It's the #5-ranked stock in the A-rated Oil & Gas Integrated industry.

Looking at the Component Grades that shape the overall grade, PBR ranks in the top 6% for Momentum, the top 2% for Value, and the top 2% for our AI factors. That mix points to a genuinely cheap stock with real price strength behind it — and one our AI model flags as poised to keep beating the market. Wall Street agrees, with a Strong Buy consensus and an average price target of about $22.27, roughly 24% above where the stock trades today.

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: PBR Long Call

Given the strong fundamental case and the fresh earnings confirmation behind Petrobras, 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 $3,586 to own 200 shares outright, two Deep-In-The-Money Calls let you control those same shares for roughly $1,202.

• The Play: $17 Strike Call (Expiring Feb 19, 2027), 2 contracts
• Delta: 0.9888 — 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: ~96% — Nearly all 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: 2.09x — Every dollar moves 2.1x 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%), PBR only needs to reach approximately $24.78 — a roughly 32% move in the stock that produces a 100% return on the option premium.

Why Options Over Shares?

A 32% move in PBR stock would be a solid return for shareholders. In these Deep-In-The-Money options, that same move has the potential to double your investment while putting only about $1,202 at risk instead of $3,586.

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?

PBR  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.