Price Forecast:

Bullish Case: The FTI options term structure shows increasing implied volatility, signaling potential positive sentiment. Strong historical returns suggest a likelihood of price appreciation from current levels, particularly over the next year, supported by robust contract pipeline and demand.

Bearish Case: Potential risks arise from low trading volume and recent mean reversion patterns in price action. Market volatility is elevated, which could lead to corrections. Negative correlations with historical forecasts suggest that upward momentum may falter soon.

Potential Outcomes:

1. 60% chance of price increase reflecting strong contract wins.

2. 25% probability of stagnation as profit-taking may occur.

3. 15% chance of downside if market volatility escalates due to external pressures or weaker-than-expected earnings.

Trading Oracle: Initiate a bullish debit spread by buying $27.00 strike calls and simultaneously selling $28.00 strike calls, targeting a 30-60 day expiry. This leverages implied volatility pricing and manages risk, with higher potential returns if FTI moves upwards as forecasted. Positive edge suggested.

October 27, 2024