Price Forecast:

Bullish Case: EL might see a rebound as consumer sentiment strengthens in the upcoming holiday season, leading to increased sales, indicated by a historical recovery trend in similar periods. Implied volatility indicates potential for short-term gains.

Bearish Case: Continued economic pressures and historical declines (down 72.7% from two years ago) pose risks for EL. High implied volatility signals market anxiety, which can depress stock prices further and keep investors cautious.

Potential Outcomes:

1. Recovery in consumer spending (30%): Surge in sales during holidays could boost EL.

2. Continued decline (40%): Persistent bearish sentiment may further suppress prices.

3. Increased volatility (30%): Market reactions to economic data could create sharp price movements.

Trading Oracle: Consider a bearish credit spread by selling the $65 call and buying the $68 call, exploiting high implied volatility with a market odds of 75% for profit. Alternatively, to hedge, a bullish debit spread with $62/$60 puts could target minor recoveries, offering a high return potential at defined risk. Focus on short expirations.

November 17, 2024