Price Forecast:

Bullish Case: If inflation moderates and interest rates stabilize, there could be a strong bullish trend in REM, supported by rising demand for mortgage REITs, potentially pushing prices above $24.

Bearish Case: Heightened economic uncertainty coupled with rising interest rates may drive further bearish sentiment, risking further declines below the $20 level, as seen in historical patterns.

Potential Outcomes:

1. Stable housing market fuels growth (30% likelihood).
2. Sustained inflation leads to higher rates, causing declines (25% likelihood).
3. Economic recovery boosts demand for REITs (20% likelihood).
4. Market volatility remains elevated, suppressing growth (25% likelihood).

Trading Oracle: Engage a bullish strategy through a debit call spread, buying 12/20/2024 $22 calls and selling $23 calls. This capitalizes on low implied volatility and potential upside in a stable economic environment, ensuring a favorable risk-reward profile with a high probability of profit.

December 20, 2024