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Price Forecast:

Bullish Case: Growing confidence in the cannabis sector, coupled with improving credit quality and potential regulation changes, could drive REFI's price higher. Its attractive yield underlines this opportunity for investors seeking stable income.

Bearish Case: High operational concentration and lingering regulatory uncertainties in the cannabis market may pressure REFI's performance, especially if refinancing rates continue to rise, impacting borrower solvency.

Potential Outcomes:

1. Successful regulatory changes (30% chance) boost capital access.

2. Continued status quo (50% chance) stabilizes dividends.

3. Increased market volatility (20% chance) negatively impacts credit performance.

Trading Oracle: Consider a bullish debit spread: buy long calls at $17.50 and sell short calls at $20. The current market volatility suggests positive risk/reward. Outlook: moderate-term (3-6 months), capitalize on robust dividend and potential regulatory tailwinds.

August 22, 2024