Price Forecast:

Bullish Case: EXR's strong historical return rates (high likelihood of positive returns at longer holding periods) combined with elevated implied volatility suggests traders are optimistic, indicating potential upward price movement as market conditions improve.

Bearish Case: Concerns over high implied volatility impact, alongside macros impacting the self-storage sector, could lead to downgrades in performance, suggesting potential for downward pressure on EXR shares.

Potential Outcomes:

1. Continued revenue growth due to urban factors (55%);

2. Rental and occupancy pressures lead to declines (30%);

3. Market fluctuations cause greater volatility (10%);

4. Strategic acquisitions position for growth (5%).

Trading Oracle: A bullish strategy involving long call spreads is viable given the uncertainty in market conditions. Buy EXR $155 calls (delta 0.57) and sell $160 calls (delta 0.18) for a bullish spread. This approach targets short-term volatility spikes while limiting exposure with potentially high returns.

December 18, 2024