Bullish Case: Coty’s focus on luxury and fragrance sectors, coupled with strategic brand initiatives, supports a potential price rebound. The market shows higher call volume, implying bullish sentiment.

Bearish Case: Persistently high leverage and flat historical price action suggest financial vulnerability. Competitiveness in the beauty industry poses risk, further constrained by volatile macroeconomic conditions.

Potential Outcomes:

• Continued fragrance sales growth bolsters stock (60%).
• High leverage constrains financial flexibility, raising risk of downturn (30%).
• External economic shocks exacerbate volatility (10%).

Trading Oracle: Execute a bullish call debit spread: buy August $8 calls, sell August $10 calls. This strategy capitalizes on potential growth while controlling risk. With elevated call volume and implied volatility slightly declining, this offers a favorable risk-reward profile. Monitor closely for macroeconomic shifts.

January 29, 2025