Bullish Case: Levi Strauss could benefit from increasing demand in Asian markets and successful direct-to-consumer strategies, enhancing revenue prospects. The release of their climate transition plan adds positive sentiment as sustainability becomes central to consumer choices.

Bearish Case: Economic uncertainties and persistent weaknesses in U.S. and European markets could hinder Levi’s recovery. High inventory levels and ongoing management distractions pose risks despite positive growth ambitions in Asia.

Potential Outcomes:

1. Asian market growth accelerates revenues: 40% probability.

2. U.S./European weaknesses persist, stunting growth: 50% probability.

3. Effective DTC strategies propel earnings: 30% probability.

4. Operational improvements mitigate inventory challenges: 20% probability.

Trading Oracle: Adopt a bullish strategy by initiating a put spread: sell 1 LEVI $17.00 put and buy 2 $15.00 puts expiring in ~70 days, leveraging Helium's high probability-of-profit (>79%). This approach captures premium from flat volatility, aiming for a potential return of 24% (54% annualized).

November 12, 2024