Price Forecast:

Bullish Case: Nordstrom's privatization offers strategic flexibility, potentially boosting profitability and operations away from market pressures. Inventory and sales are positioned well for growth, as indicated by high call option volume.

Bearish Case: Persistent urban challenges and financial instability, along with backwardation in the options term structure, suggest potential downside risks to Nordstrom's stock.

Potential Outcomes: 50% chance of growth from privatization benefits and promotions, 30% likelihood of continued urban pressure negatively impacting sales, and 20% chance of stability through partial market recovery.

Trading Oracle: Implement a bullish call debit spread: Buy JWN $25 calls, sell $27 calls, expiring in 30 days. Current backwardation and privatization news provide high potential upside while limiting risk. Expect near-term volatility compression, optimizing profit.

December 24, 2024