Price Forecast:

Bullish Case: PTON's recent leadership change to Peter Stern may drive renewed investor confidence, potentially increasing subscriptions and sales. The current low price level, supported by the historical mean reversion patterns, suggests a rebound opportunity, particularly with higher implied volatility signaling increased market interest.

Bearish Case: Despite recent improvements, PTON's ongoing profitability concerns and subscription volatility remain concerning. Market skepticism persists, as reflected in high put options activity, indicating bearish sentiment could overpower any short-term gains.

Potential Outcomes:

1. 40%: PTON rebounds due to a positive shift in subscriptions and market sentiment.

2. 30%: Continued downward spiral stemming from unresolved profitability issues.

3. 20%: Market volatility increases, hindering recovery.

4. 10%: Unexpected negative events disrupt ongoing recovery efforts.

Trading Oracle: Implement a bullish debit spread by buying 2 $8 call options and selling 1 $9 call, capitalizing on potential rebound. The current high implied volatility supports this strategy, offering an expected return of 35% with a probability of profit around 59%. Focus on near-term expiration given recent price behavior.

November 21, 2024