Centene Options Volume Peaks on Buyout Buzz

Calls and puts are flying off the shelves today

Mar 27, 2019 at 10:37 AM
facebook twitter linkedin


The shares of Centene Corp (NYSE:CNC) are spiraling, after the U.S. health insurer said it was buying rival WellCare Health Plans (WCG) in a cash-and-stock deal valued at $17.3 billion, including debt. The purchase is expected to boost CNC's Medicaid division, as well as its exposure to the Medicare Advantage market, and comes amid a renewed effort from the Trump administration to repeal Obamacare.

At last check, CNC shares were down 7.4% at $50.80, on track for their fourth straight loss. The stock is down 12.1% year-to-date, but the round $50 level appears to be emerging as support, though, a region that marks Centene's early 2018 lows.

Options traders have been quick to react, with roughly 18,000 calls and 3,507 puts on the tape -- 20 times what's typically seen at this point, and total options volume already at a new 52-week peak.

Most active is the April 55 call, where it looks like speculators could be selling to open the options. If this is the case, they're setting a short-term ceiling for CNC stock. Traders could also be anticipating a volatility crush. Short-term volatility expectations have spiked today, per Centene's 30-day at-the-money implied volatility of 37.1% -- in the 96th percentile of its annual range.

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 

300x250 - Banner 3 - v1