Price Forecast:

Bullish Case: RKT's implied volatility is higher than market levels, indicating strong bullish sentiment. Mean reversion in price suggests a potential rally as market participants react favorably to upcoming earnings reported positively, potentially driving prices higher.

Bearish Case: Weak fundamentals persist, with high debt and declining revenue likely to inhibit significant price increases. Market uncertainty is elevated, shown through high implied volatility in options, suggesting potential downside pressure despite bullish indicators.

Potential Outcomes:

1. 50% chance of a moderate price increase driven by positive earnings and reduced market volatility.

2. 30% chance of sustained declines due to weak fundamentals.

3. 20% chance of sideways movement amid mixed signals.

Trading Oracle: Focus on bullish strategies: Buy the $16.50 call option expiring November 15, 2024, as implied volatility is attractive. Pair with a sell of the $17.50 call to create a debit spread, leveraging positive market sentiment. Target a return of 20% with limited downside risk.

November 05, 2024