Price Forecast:

Bullish Case: The implied volatility surface shows decreasing volatility for higher strike prices, suggesting potential upward momentum for GK. Given strong historical returns in holding periods of 1-3 years, favorable earnings announcements could catalyze significant price appreciation.

Bearish Case: High current implied volatilities, particularly below $21, indicate potential downside risks. If macroeconomic conditions worsen or if negative market sentiment prevails, we might see a sharp decline in GK's price as past performance suggests.

Potential Outcomes:

• Moderate gains (40% probability) driven by positive earnings outlook.
• Sharp decline due to macroeconomic factors (30% probability).
• Flat performance (20% probability) as traders await catalysts.
• Unanticipated market rally (10% probability) influenced by economic recovery indicators.

Trading Oracle: Engage in a bullish debit spread: Buy GK $22 calls and sell $24 calls expiring in early 2025. This strategy capitalizes on the potential upward move indicated by decreasing volatility while minimizing risks. Alternatively, consider a protective put strategy if bearish sentiments intensify, ensuring a balanced approach to positioning.

November 24, 2024