Price Forecast:

Bullish Case: Strong potential for a rally as recent high call volume indicates bullish sentiment, coupled with higher implied volatility forecast. Positive forecast of +1.26% boosts the case for upside momentum fueled by favorable conditions in the housing market.

Bearish Case: High levels of implied volatility suggest significant risks ahead as market sentiment remains downbeat, supported by a decline in price and high trading volume of puts. This indicates possible heightened selling pressure and uncertainty in market fundamentals.

Potential Outcomes:

1. 40% chance of a +3% price rise as market stabilizes.

2. 30% chance of a -5% drop due to negative momentum.

3. 30% chance of stagnation as mixed signals create indecisiveness in the market.

Trading Oracle: Engage in a bullish debit spread: buy November 2 $2.00 calls and sell $2.50 calls. The strategy benefits from the expected volatility increase, has an implied probability of profit at 76%, and potential annualized return of +58%. Optimal for leveraging short-term price fluctuations.

October 29, 2024