OBE Forecast


Bullish Case: OBE's robust well performance and acquisition strategy have driven significant production increases, augmenting cash flow and operational synergies. Strong results in Cardium wells highlight its potential for sustained growth.


Bearish Case: Mounting environmental disputes and legal battles with Woodland Cree First Nation threaten to stall OBE's operations. Historical mean reversion and high volatility expose the stock to downside risks.


Potential Outcomes:

1. Resolution of environmental disputes and production increase: 40%.

2. Prolonged legal battles impacting operations: 30%.

3. Continued mean reversion in price: 30%. These probabilities factor in recent trends and past predictions.


Trading Oracle: Initiate a credit spread to capitalize on elevated implied volatility and mean reversion. Sell OBE $7.5 puts and buy $5.0 puts expiring January 2025. This short volatility stance targets a 1:2 risk/reward ratio, balancing bullish production outlook with potential operational risks.


July 20, 2024


Obsidian Energy Forecast

OBE      Obsidian Energy











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Assets that tend to move strongly with OBE



XLE Forecast + Options Trading Strategies   XLE  Energy Select Sector SPDR (0.65)


ETRN Forecast + Options Trading Strategies   ETRN  Equitrans Midstream (0.02)


LI Forecast + Options Trading Strategies   LI  Li Auto (-0.16)


VFC Forecast + Options Trading Strategies   VFC  VF (-0.45)



Uncorrelated Assets

Assets with little price relationship to OBE



ETRN Forecast + Options Trading Strategies   ETRN  Equitrans Midstream (0.02)


LI Forecast + Options Trading Strategies   LI  Li Auto (-0.16)


VFC Forecast + Options Trading Strategies   VFC  VF (-0.45)


XLE Forecast + Options Trading Strategies   XLE  Energy Select Sector SPDR (0.65)



Anticorrelated Assets

Assets that tend to move strongly against OBE



XLE Forecast + Options Trading Strategies   XLE  Energy Select Sector SPDR (0.65)


ETRN Forecast + Options Trading Strategies   ETRN  Equitrans Midstream (0.02)


LI Forecast + Options Trading Strategies   LI  Li Auto (-0.16)


VFC Forecast + Options Trading Strategies   VFC  VF (-0.45)





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