Price Forecast:

Bullish Case: Increased regulatory support for nuclear energy coupled with rising global demand for clean energy could propel NLR prices higher, leveraging historical mean-reversion patterns seen in the return surfaces.

Bearish Case: Geopolitical instability and adverse regulatory outcomes could lead to a significant decline in NLR prices, especially with current high implied volatility indicating market apprehension.

Potential Outcomes:

1. Price increases above $100 due to favorable legislation (25%).
2. Consolidation around $95-$100 as investors await developments (50%).
3. Drop below $90, prompted by regulatory setbacks (25%).

Trading Oracle: A bullish debit spread targeting the NLR 99C and 105C would capitalize on the current market sentiment. Alternatively, consider credit spreads if volatility stays high, impacting options pricing. A bullish stance is favored in the short term, with targets set at $100 within three months.

November 24, 2024