Bullish Case: BHP's strategic focus on copper and nickel positions it well for growth in the renewable energy space. The current mean-reverting historical price surface and low implied volatilities suggest potential for positive price movement, especially with recent optimism in China recovery.

Bearish Case: Legal challenges, declining iron ore demand, and unfavorable market conditions could pressure BHP prices downward. Elevated short-term volatilities and social media concerns about ESG compliance reinforce bearish outlook. Current market uncertainties further heighten risks.

Potential Outcomes:

1) 40% chance of slight recovery to $54 driven by uptick in copper demand.

2) 35% chance of a decline to $48 amid legal pressures.

3) 25% chance of staying within $50-$52 reflecting market stability.

Trading Oracle: A Bullish Short Volatility strategy is optimal, capitalizing on current low implied volatilities. Selling ATM put options while buying more OOTM put options could yield positive returns as volatilities normalize with a potential China recovery.

March 18, 2025