Price Forecast:

Bullish Case: Cedar Fair's merger with Six Flags provides a strong growth narrative. Recent social media sentiment reflects anticipation for new attractions and a potential revival in attendance, alongside significant cost-saving opportunities from operational synergies.

Bearish Case: Concerns over high implied volatility in FUN options, signaling market skepticism, suggest that unresolved integration issues and external economic pressures could hinder recovery, leading to potential declines in attendance and revenue.

Potential Outcomes:

• Successful integration with 70% chance, enhancing operational efficiency and revenues.
• Continued economic pressures and low attendance leading to a 20% chance of price decline.
• Market optimism due to upcoming attractions resulting in a 10% chance of price surge.

Trading Oracle: Adopt a bullish stance with a debit spread strategy: purchase FUN $45 calls and sell $50 calls, capitalizing on elevated implied volatility while leveraging short-term recovery narratives through the first half of 2025. Focus on near-term expirations to maximize upside and hedging against potential declines from current market skepticism.

December 20, 2024