Price Forecast:

Bullish Case: Increased demand from robust holiday travel post-COVID, alongside strategic cabin improvements and a potentially improved brand image from resolving activist investor pressures could boost stock performance.

Bearish Case: Ongoing labor disputes and high operational costs, combined with the impact of an activist investor pushing for leadership change, may delay recovery and erode customer trust, negatively impacting shares.

Potential Outcomes:

1. 60% chance of revenue recovery if operational improvements are implemented effectively post-strike.

2. 50% chance of a significant drop if labor negotiations fail, leading to strikes.

3. 50% chance of falling stock prices due to rising operational costs.

Trading Oracle: Engage in a bullish long volatility strategy using debit spreads. Buy LUV $32.00 calls, sell $34.00 calls with an expiration target around holiday peak travel. This maximizes potential upside during the busy season while managing risk with a favorable risk-to-reward ratio.

November 14, 2024