Bullish Case: HES may see upward momentum fueled by stabilizing oil prices and robust production growth in Guyana, targeting long-term cash flow growth and shareholder returns, bolstered by support from Chevron's acquisition.

Bearish Case: Regulatory pressures and volatility in the oil market pose risks to HES's profitability, alongside potential geopolitical tensions affecting production in Guyana, leading to investor skepticism and stock downturns.

Potential Outcomes:

1. Increased production in Guyana leads to share price rise (70%).

2. Stricter regulation impacts profitability (20%).

3. High oil price volatility leads to large price swings (10%).

Trading Oracle: Given the current market conditions and HES's volatility profile, consider initiating a bearish credit spread by selling HES $140 call options and buying HES $145 call options. This setup aligns with a neutral to bearish outlook, maximizing profit potential while leveraging current implied volatility trends. Aim for an expiration in 30 days for optimal risk/reward balance.

November 03, 2024