Price Forecast:

Bullish Case: AON's robust options volume suggests strong institutional interest; the higher implied volatility indicates potential price spikes. Positive risk trends in insurance sectors support a sustained recovery.

Bearish Case: Elevated market volatility paired with low trading volume suggests underlying uncertainty; macroeconomic pressures may weaken earnings outlook, thus posing downside risks to AON's price.

Potential Outcomes:

1. Continued mean reversion to ~$400 (30%);

2. Earnings beat driving price to ~$420 (25%);

3. Bearish macro events pushing price to ~$360 (25%);

4. Regulatory changes causing shifts leading to ~$350 (20%).

Trading Oracle: Implement a bullish credit spread by selling $390 puts and buying $380 puts, capitalizing on AON's resilient market trends and short volatility strategy. Aim for a 60% probability of profit and 15% return on capital. Monitor volatility and adjust as conditions change for maximum alpha.

November 14, 2024