Price Forecast:

Bullish Case: MELI is showing resilience with positive sentiment amidst volatility; the strong performance in fintech and e-commerce suggests potential upward movement. Implied volatility indicates expected upswings, especially with call options volume reflecting bullish optimism.

Bearish Case: Recent flattening of market sentiment and high operational costs raise concerns about MELI's profitability. If economic conditions deteriorate, further downward pressure may ensue, driven by heightened competition in LATAM and macroeconomic challenges.

Potential Outcomes:

• Price increases due to bullish earnings momentum (40% probability).
• Stagnation driven by market noise and indecision (30% probability).
• Significant declines if major competitors disrupt MELI’s foothold (30% probability).

Trading Oracle: Consider a bullish strategy by executing a debit spread on MELI's near-the-money calls to capitalize on the upward shift in implied volatility. Target buying the $1800 call and selling the $1850 call, expiring March 2025. This setup balances risk while maximizing profit potential as sentiment shifts favorably.

December 20, 2024