Price Forecast:

Bullish Case: DFS could see a rapid recovery driven by strong institutional ownership and upcoming favorable earnings reports, coupled with improving macroeconomic factors and successful navigation of regulatory challenges.

Bearish Case: However, DFS faces significant risks from ongoing regulatory scrutiny and high charge-off rates which may hinder growth prospects, creating downward pressure on stock prices and investor sentiment.

Potential Outcomes:

• Overcoming regulatory hurdles (40% chance)
• Continued price declines due to scrutiny (35% chance)
• Neutral market movement with flat performance (25% chance)

Trading Oracle: Consider a bullish stance by implementing a debit spread: Buy the DFS $185 call and sell the $190 call expiring in January 2025. This approach leverages current implied volatility data showing attractive upside potential while limiting risk in a volatile environment, targeting a high reward-to-risk ratio with a favorable market outlook.

November 30, 2024