Bullish Case: FirstEnergy (FE) could benefit from a recovery in investor sentiment, driven by successful infrastructure projects and regulatory easing, potentially advancing its stock past $45. Low implied volatility forecasts suggest limited downside risk.

Bearish Case: Continued legal scrutiny and market uncertainties may pressure FirstEnergy's stock below $38. Elevated implied volatility indicates high market anxiety and risks surrounding upcoming earnings reports and infrastructure project delays.

Potential Outcomes:

• Successful infrastructure rollout could boost stock to $45 (60% probability).
• Legal challenges lead to stock drop below $38 (30% probability).
• Market volatility remains high, causing stock stagnation around $40 (10% probability).

Trading Oracle: Consider a bearish long volatility approach by buying 1 $41 put option while selling 1 $40 put option, aiming for a market anticipated drop with positive edge. This strategy captures potential volatility spikes while managing risk effectively, allowing profit from legal concerns impacting sentiment.

December 10, 2024