Price Forecast:

Bullish Case: EQR's favorable demographics and robust tenant demand, combined with decreasing implied volatility and historical mean reversion, suggest substantial upside potential amidst ongoing market stability.

Bearish Case: Potential economic headwinds, high accumulation of put options, and an expected continued presence of billionaire investors in the housing market could exacerbate price declines for EQR in the near term.

Potential Outcomes:

1. Price increases to $80 by Q1 2025 (40% chance).
2. Price stabilizes around $75 as demand remains strong (35% chance).
3. Price declines to $70 if economic pressures escalate (25% chance).

Trading Oracle: Explore a bullish position using a short put spread: sell the $70 puts, buy the $67.50 puts, targeting 75% probability of profit over a 30-day horizon. This takes advantage of low endpoint volatility and the potential normalized demand for rentals.

December 04, 2024