Price Forecast:

Bullish Case: Positive sentiment from Schrodinger's ongoing AI research advancements supports SDGR upward momentum, with implied volatility suggesting market confidence. Bullish positions, especially in January 2025 calls, could exploit this potential.

Bearish Case: SDGR exhibits mean-reverting behavior and substantial historical volatility, indicating short-term price corrections. Market uncertainty may lead to downward pressure as investors react to potential disappointing results.

Potential Outcomes:

1. 50% chance of moderate gains driven by positive AI research.

2. 30% likelihood of sideways trading due to prevailing market sentiment.

3. 20% risk of sharp declines occurring from unfavorable news or earnings uncertainty.

Trading Oracle: Consider a bullish debit spread by buying the SDGR 01/17/2025 20C and selling 22.5C. With high implied volatility and positive market sentiment, this strategy leverages expected price recovery while limiting risk. Target a 30% return with over 70% probability of profit, considering current trading volume dynamics.

November 20, 2024