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Price Forecast:

Bullish Case: Capri's merger with Tapestry potentially boosts brand collaboration and market reach, attracting new customers. With increasing investor interest reflected in high call option volume, bullish sentiment grows.

Bearish Case: Ongoing market volatility and high implied volatility levels indicate investor uncertainty, suggesting potential declines in share price. The heavy put option activity indicates a bearish outlook despite recent gains.

Potential Outcomes:

1. Merger integration success (60% probability).

2. Continued market skepticism leading to volatility (30% probability).

3. A rebound from short-term price corrections (10% probability).

Trading Oracle: Engage in bullish debit spreads targeting the October 25th expiry, focusing on $45 and $50 calls to leverage potential upward movement. This capitalizes on positive sentiment from the merger while hedging against volatility. Implied volatility is high, enhancing profit potential. Set stop-loss orders to manage downside risk effectively.

October 16, 2024