Price Forecast:

Bullish Case: The high implied volatility indicates strong buying interest. Historical data suggests potential price recoveries over longer holding periods, supported by favorable dividend outlooks from international equities.

Bearish Case: Current market uncertainty and high implied volatility raise concerns about potential price erosion. Historical performance shows significant downside risks during adverse economic conditions, which could amplify negative sentiment around FID.

Potential Outcomes:

1. Bullish Rebound (30%): Improved dividends and market sentiment.

2. Range-Bound Movement (35%): Prices stabilize around $16.74.

3. Sharp Decline (15%): Adverse economic news triggers selling.

4. Gradual Decline (20%): Sustained low returns diminish investor confidence.

Trading Oracle: Implement a bullish debit spread targeting $18C and $19C for January 2025 expiry. This positions for potential upward movements while hedging against volatility spikes. With high implied volatility, the upside potential outweighs the downside risk, offering a solid risk-reward ratio.

November 14, 2024