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Bullish Case: The implied volatility surface indicates increasing uncertainty with time but suggests sellers may find opportunities as market volatility stabilizes post-events. A potential economic rebound could lead to a price climb above $15, reinforcing positions.

Bearish Case: Elevated historical return likelihood at lower yields and rising implied volatility signals increased bearish sentiment. Further interest rate hikes could exacerbate downside pressures, pulling DX under the $12 mark.

Potential Outcomes:

1. Economic recovery boosts demand, 30% chance;

2. Increased interest rates stunt growth, 40% chance;

3. Stable market equilibrium maintains current prices, 30% chance.

Trading Oracle: Given the bearish landscape with high implied volatility, consider a bearish credit spread strategy: sell $12.50 puts while buying $10.00 puts to limit risk. This takes advantage of high volatility with a high probability of profit and creates a net credit with favorable reward-to-risk.

October 20, 2024