Price Forecast:

Bullish Case: Lucid's upcoming Gravity SUV launch could significantly drive sales, aided by recent funding that improves liquidity. High implied volatility suggests potential price spikes driven by positive market responses. Limited competition in luxury EVs may enhance growth prospects.

Bearish Case: Continuing high cash burn and aggressive competition from established brands like Tesla pose existential threats. The elevated implied volatility indicates excessive market anxiety, suggesting potential negative shocks or liquidity issues that could depress stock prices.

Potential Outcomes:

1. Successful Gravity launch and high demand leads to a 60% chance of price rally (+30%);

2. Continued cash drain and missed targets puts a 40% chance on a 25% price drop;

3. Strengthened backing from investors increases stability by 50%.

Trading Oracle: A short volatility strategy appears favorable. Consider shorting 2.50 calls and buying 3.00 calls, aiming for a modest decline in volatility before the Gravity launch. This approach seeks to exploit elevated implied volatility with a high probability of profit, targeting a strong risk/reward ratio.

November 12, 2024