Bullish Case: BKH could benefit from improving market sentiment and regulatory supports boosting utility demand. A rise in customer base may enhance revenue and drive up stock price performance, evidenced by recent mean reversion trends.

Bearish Case: Continued regulatory pressures and fluctuating environmental concerns pose risks to BKH's profitability. Persistently high implied volatility indicates market uncertainty, potentially exacerbating negative price movements.

Potential Outcomes:

• 1. Regulatory improvements boost demand (30% chance).
• 2. Continued bearish trends due to environmental pressures (50% chance).
• 3. Positive earnings reports lead to investor confidence (20% chance).

Trading Oracle: Consider a bullish debit spread using BKH 12/20/2024 60 Call and 70 Call, leveraging upside potential amid mean reversion. Given the current high implied volatility, a long volatility strategy with limited downside risk appears favorable.

November 26, 2024