Price Forecast:

Bullish Case: Coty's potential revenue growth from partnerships, including Kim Kardashian's stake buyback, coupled with a recent favorable market sentiment amidst stabilizing volatility, indicates a compelling bullish outlook. This is supported by positive historical returns in similar market conditions.

Bearish Case: The company's high leverage ratio continues to pose significant financial risk, along with elevated implied volatility suggesting market uncertainty. This environment could catalyze downward price actions, especially if legal challenges escalate.

Potential Outcomes:

1. Revenue from Kardashian buyback boosts stock (60%);

2. Credit issues from high leverage strain finances (30%);

3. Legal challenges negatively impact shares (5%);

4. Unpredicted macroeconomic shifts induce volatility (5%).

Trading Oracle: Implement a strategy with a bullish long call spread by buying COTY $7.00 calls and selling $8.00 calls as earnings approach in 9 days. High implied volatility offers premium capture opportunities. Risk is managed through defined options exposure. Target upside on revenue uptick from partnerships while being vigilant on leverage risks.

November 12, 2024