Price Forecast:

Bullish Case: CDNS continues strong growth driven by AI demand, outperforming competitors. Recent earnings support a bullish outlook, with positive sentiment reflected in high call option volumes outside a stable volatility environment.

Bearish Case: Insider selling and overvaluation risks loom, with a potential market correction indicated by recent price action. The options volume suggests caution as profitability concerns persist amidst geopolitical pressures.

Potential Outcomes:

1. 60% chance of continued bullish momentum from AI growth.

2. 25% chance of a correction driven by overvaluation concerns.

3. 15% chance the stock remains flat due to geopolitical instability.

Trading Oracle: Consider a bearish short volatility strategy by selling the $300 call options and buying the $305 call options, aiming for a 49% potential return. This takes advantage of the current market setup, where implied volatility is stabilizing, maximizing profitability with a favorable risk-reward ratio.

November 19, 2024