Bullish Case: NFE shows potential for bullish movement due to high implied volatility (e.g., 117.2%) and increasing call option volumes, indicating strong market sentiment ahead of Q4 earnings driven by Brazilian project execution.

Bearish Case: The potential for bearish outcomes looms with significant implied volatility on puts (up to 500%) and likelihood of dividend cuts due to ongoing profitability concerns, reflected in the historical return data showing volatility under stress.

Potential Outcomes:

• 1. Successful execution of Brazilian projects: 70%
• 2. Dividend cuts impact investor sentiment: 40%
• 3. Bullish market reactions to positive earnings surprises: 60%
• 4. High market volatility leads to further price dips: 50%
• 5. Continued growth in LNG demand stabilizes NFE: 55%

Trading Oracle: Adopt a bullish strategy by implementing a debit spread: buy NFE 10.00 calls, sell 11.00 calls, targeting Q4 earnings. This approach capitalizes on the high implied volatility for upside potential, managing risk effectively. Alternatively, consider a short-term credit spread if bearish indicators mount from earnings reports.

November 22, 2024