Price Forecast:

Bullish Case: Positive Phase 2 trial results drive significant demand for zuranolone, leading to a price surge as uncertainty decreases. High volatility supports bullish options strategies with potential for high returns.

Bearish Case: Continued regulatory setbacks and poor market reception for zuranolone lead to declining stock prices, exacerbated by workforce reductions and investor skepticism, increasing put option demand.

Potential Outcomes:

1. 50% chance of positive trial results leading to a price increase to $10+.
2. 30% chance of moderate success, stabilizing around $5-$7.50.
3. 20% chance of negative outcomes causing price drops below $4.

Trading Oracle: Considering the high implied volatility and uncertain market environment, a bearish credit spread using December 5.00 Puts while shorting at the 7.50 strike would generate income with a high probability-of-profit. This is suited for capturing immediate downward movements given current market sentiment.

December 18, 2024