Price Forecast:

Bullish Case: The continued low implied volatility suggests market optimism about ADM's recovery post-accounting issues. A rebound in commodity prices coupled with positive earnings could lead to substantial price appreciation.

Bearish Case: Ongoing legal troubles and the accounting scandal may weigh heavily on investor sentiment, potentially resulting in further price declines, especially if earnings fall short of expectations.

Potential Outcomes:

1. ADM exceeds earnings expectations (40% probability).

2. Further legal issues arise, leading to a price drop (30% probability).

3. Commodity price recovery boosts ADM’s stock (20% probability).

4. Market sentiment shifts negatively, impacting stock price (10% probability).

Trading Oracle: Execute a bullish short volatility trade by selling $52 puts and buying $50 puts, expecting minimal prob. of ADM breaching $52. Hedge against volatility but capitalize on near-term market stability. This strategy offers a 76% odds of profit with a risk:reward ratio of 1:2. Explore future calls if bullish momentum continues. Focus on November strikes for efficiency.

November 19, 2024