Bullish Case: Autoliv may benefit from emerging safety technology demands and analyst upgrades, reflected in reduced volatility in the ALV options term structure. Strong fundamentals indicate a rebound possibility.

Bearish Case: Continued flat price action and the persistence of high implied volatility for near-term options suggest potential for price stagnation or decline, driven by market overvaluation fears and insider selling.

Potential Outcomes:

1. 40% chance of price recovery supported by strong demand for safety products.

2. 30% likelihood of further flat performance amid market uncertainty.

3. 20% chance of decline tied to overvaluation concerns.

4. 10% risk of significant volatility spikes due to external market factors.

Trading Oracle: Consider a bullish long call spread targeting $110 by buying ALV $105 calls and selling $110 calls in early 2025. This captures upside potential with manageable risk, as implied volatility stabilizes post-earnings, creating favorable entry conditions.

November 17, 2024