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Nerves on edge as Centene rebounds

David Russell (david.russell@optionmonster.com)

Centene is fighting back from a mid-year selloff, but one trader is positioning for another potential drop in the health insurer's shares.

optionMONSTER's Depth Charge tracking program detected the purchase of 2,250 December 37.50 puts for $0.10 and $0.15. Volume was almost 8 times open interest at the strike, indicating that a new position was initiated.

CNC is down 0.68 percent to $45.14 in morning trading. The stock climbed almost 50 percent since the middle of the year, when it got hammered over worries about states funding its health plans. The company predicted a strong rebound in July and then crushed estimates when results were reported on Oct. 23.

The December 37.50 puts are far from the money and will make money only if CNC falls sharply in the next three weeks. The buyer could be an investor looking to hedge a long position or a speculative bear using the options in lieu of shorting the stock. (See our Education Section.)

More than 2,700 contracts have traded so far today, 5 times greater than the average amount in a normal session. Puts outnumber calls by a bearish 17-to-1 ratio, according to the Depth Charge.

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