Price Forecast:

Bullish Case: AB can benefit from increased investor interest in ESG funds amid positive earnings momentum. The implied volatility suggests traders are pricing in upper probability moves, indicating potential price increases as confidence grows in upcoming earnings reports.

Bearish Case: Increased volatility and macroeconomic pressures, including rising interest rates, could suppress AB's price. The flattening of returns in the historical surface highlights risks of stagnant growth or declines, particularly in Q1 if earnings underperform expectations.

Potential Outcomes:

• 40% chance of Q4 earnings beating market expectations, leading to price rise.
• 30% likelihood of regulatory scrutiny dampening market sentiment, impacting price negatively.
• 20% chance of significant market volatility leading to a short-term drop in shares.
• 10% probability of successful ETF launches boosting investor interest in AB.

Trading Oracle: Implement a bullish vertical call debit spread by buying the AB 40.00 C and selling the AB 45.00 C for January 2025 expiry. This hedges against volatility while positioning for upside potential with a manageable risk. The current implied volatility supports advantageous pricing for calls, targeting significant earnings momentum as a catalyst.

December 14, 2024