Price Forecast:

Bullish Case: AZUL could experience a rebound as traffic demand increases post-pandemic, leveraging its recent operational efficiencies, potential merger synergies, and favorable macroeconomic shifts. Sustained tourism growth in Brazil may lead to higher revenue for airlines, benefiting AZUL significantly.

Bearish Case: Continued operational inefficiencies, economic downturns, or increased fuel costs could suppress AZUL's recovery, exacerbating existing market skepticism. If investor confidence wanes further, shares may continue to decline, reflecting historical volatility trends.

Potential Outcomes:

• 1. Recovery in air travel boosts stock: 30% chance.
• 2. Costs from fuel volatility and interest rates persist: 50% chance.
• 3. Merger synergies significantly enhance prices: 20% chance.

Trading Oracle: Consider initiating a long debit spread on AZUL by buying $2.50 calls expiring January 17, 2025, and selling $5.00 calls to harness potential upside from a rebound in travel. The current high implied volatility offers favorable conditions for long positioning, targeting a potential recovery in early 2025.

November 22, 2024