Price Forecast:

Bullish Case: Strong AUM growth and strategic acquisitions are likely to continue, supported by current low volatility forecasts. OWL's position in a recovering economy may lead to significant price appreciation in the coming months.

Bearish Case: Market uncertainties and elevated implied volatility from recent options activity indicate potential downside risks. Any economic downturn could exacerbate defaults and pressures on OWL's portfolio, negatively impacting returns.

Potential Outcomes:

1) Continued AUM growth with a 60% probability as economic recovery progresses.

2) Rise in defaults leading to increased non-accruals, estimated at 30% probability.

3) Potential for accretive M&A activity with a likelihood of 80%.

Trading Oracle: Given the current implied volatility structure, consider initiating a bullish debit spread by buying OWL $24 calls and selling $25 calls expiring in about 45 days to capture expected upward movements while managing risk. The structure benefits from the identified growth potential and manageable downside exposure.

November 12, 2024