Price Forecast:

Bullish Case: Lufax shows signs of recovery, backed by a rising institutional interest in China's fintech sector. The volatility surfaces indicate potential for upward price movement. Furthermore, social sentiment reflects cautious optimism among investors.

Bearish Case: Negative market sentiment persists due to regulatory scrutiny over fintech companies in China, along with a high proportion of put options indicating bearish expectations. Historical returns also showcase risks of further declines.

Potential Outcomes:

• 1) Positive regulatory changes in China driving a +30% rebound (40% probability).
• 2) Continued sell-offs from institutions causing a -25% drop (30% probability).
• 3) Stable fundamentals supporting flat performance with no gains (30% probability).

Trading Oracle: Given current conditions, implement a bullish debit spread by buying LU $3.00 calls and selling $4.00 calls expiring March 2025. This leverages the potential volatility spike while capping downside risk. Focus on a midpoint price of $2.60 to execute profitably.

December 21, 2024