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Price Forecast:

Bullish Case: High historical returns coupled with ongoing product demand improvements suggest an eventual upward correction for POWI. The implied volatility's recent decline indicates potential for price recovery.

Bearish Case: Current insider selling and elevated near-term implied volatility raise concerns about POWI's short-term stability. A likely soft earnings report could exacerbate downward pressure.

Potential Outcomes:

1. Earnings beat leading to +10% move (30%);

2. Continued insider selling causing -15% decline (25%);

3. Stabilization around current price (20%);

4. Significant demand growth yielding +5% rise (25%).

Trading Oracle: Implement a bullish debit spread by buying the POWI 60.00 call and selling the 65.00 call, capitalizing on potential price recovery in the next 30-60 days. This strategy minimizes risk with a favorable reward-to-risk profile against high implied volatility.

September 07, 2024