Price Forecast:

Bullish Case: A bullish case is supported by the high trading volume in call options and positive sentiment in implied volatility. If market conditions stabilize and demand for oil picks up, NAT could see significant recovery, pushing prices above $4 within a year.

Bearish Case: Conversely, the bearish case highlights ongoing operational challenges and potential dividend cuts. High volatility and a flat price trend reflect market skepticism, indicating a possible price decline below $3 if earnings disappoint or demand remains weak.

Potential Outcomes:

1. 50% chance of price recovery above $4 due to increased tanker demand;

2. 25% chance of price stagnation around $3;

3. 20% chance of price drop below $3 amid dividend cuts;

4. 5% chance of an unexpected spike due to favorable news.

Trading Oracle: Given the high implied volatility, consider a bullish debit spread by buying $4.00 call options and selling $5.00 calls, targeting January 2025 expiration. This captures significant upside potential while limiting risk, ideally positioned for a recovery in demand this winter.

November 03, 2024