Price Forecast:

Bullish Case: PSEC may benefit from improving economic conditions, evidenced by low implied volatility and historical returns indicating potential recovery. Continued growth in LNG projects could drive EPS higher, fostering investor confidence and potentially increasing stock prices.

Bearish Case: PSEC faces risks associated with economic headwinds and high competition, as shown by elevated implied volatility levels. Historical data suggests further downside potential, especially if market conditions deteriorate, impacting margins and investor sentiment.

Potential Outcomes:

• 35% chance of 5%+ EPS growth if LNG projects succeed.
• 30% chance of stagnation as market remains flat due to economic pressures.
• 25% chance of a 10% decline driven by competitive pressures and reduced demand.
• 10% chance of unexpected bullish news driving rapid recovery.

Trading Oracle: Consider a bullish debit spread by buying PSEC $5.00 calls expiring in May 2025 and selling $6.00 calls. The higher volatility suggests significant upside potential; targeting a $1.00 spread with high probability of profit as fundamentals improve amidst low market sentiment. Expect a 60%+ probability of profit with favorable risk-reward ratio.

December 15, 2024