Price Forecast:

Bullish Case: AES's investments in renewable energy and potential operational efficiency improvements posit a strong recovery narrative, notably if consumer confidence rebounds post-power outages.

Bearish Case: Continued financial pressures and high customer dissatisfaction from service disruptions may lead to a stagnant or declining stock, particularly with increasing competition in the energy sector.

Potential Outcomes:

• 1. 60% chance of strong growth driven by renewed energy demand.
• 2. 30% chance of stagnation due to ongoing operational challenges.
• 3. 10% chance of a significant downturn influenced by economic conditions.

Trading Oracle: Utilize bullish debit spreads by buying $14 calls and selling $15 calls for January 2025 expiry. This strategy captures upside potential while managing risk, especially given the high implied volatilities indicated by the current option market. Monitor for volatility spikes that could enhance returns.

December 12, 2024