Price Forecast:

Bullish Case: The bullish potential for EPS is supported by positive historical return trends over varied holding periods, indicating a notable likelihood of appreciation if market sentiment remains stable. Low implied volatilities at higher strikes further bolster this outlook.

Bearish Case: The bearish outlook hinges on high implied volatility at lower strikes, reflecting market uncertainty and potential adverse economic shifts. Increased volatility suggests caution, as market corrections could drive EPS below current levels.

Potential Outcomes:

• Significant upward rally towards $67 (25% likelihood)
• Continued stability around $63.5 (40%)
• Moderate corrections due to macroeconomic developments (20%)
• Sharp downturn towards $58 (15%)

Trading Oracle: Focus on establishing long debit spreads, particularly targeting the $64 strike priced options. This trade utilizes the observed volatility skew favorably, supporting a bullish stance with substantial recovery potential. Time frame: 1-2 months as sentiment stabilizes.

December 13, 2024