Price Forecast:

Bullish Case: Costco's robust membership growth and sales strategies, buoyed by strong customer loyalty and potential positive earnings surprises, create favorable conditions for price appreciation.

Bearish Case: Economic uncertainties, rising operational costs, and potential legal challenges might dampen Costco's performance, leading to decreased consumer spending and slower growth.

Potential Outcomes:

1. 70% chance: Continued growth in membership and sales driven by effective pricing strategies.
2. 20% chance: Legal issues disrupt store operations, leading to a decline in customer confidence.
3. 10% chance: Inflationary pressures reduce discretionary spending significantly, impacting overall sales.

Trading Oracle: Implement near-term bullish debit spreads using calls (e.g., $1000 and $1020) targeting short expirations as implied volatility remains higher but expected to normalize. This strategy leverages favorable conditions in the underlying stock while managing risks effectively.

December 18, 2024