Price Forecast:

Bullish Case: The implied volatility trends show a consistent decline, suggesting less market fear and potentially stable prices. Additionally, historical return data indicates a strong bullish trend over longer holding periods, supporting a likely price increase in the near term.

Bearish Case: Despite the current flat price action, market volume remains at the lowest percentile, indicating skepticism. High implied volatility for shorter durations suggests potential for sharp price corrections driven by unexpected market movements or economic data releases.

Potential Outcomes:

• 40% chance of gradual price appreciation over the next 3 months due to economic stability.
• 30% chance of sideways trading with minor corrections as market sentiment fluctuates.
• 20% chance of a sharp downturn triggered by adverse economic news or volatility spikes.
• 10% chance of sustained growth surpassing prior highs as investor confidence returns.

Trading Oracle: Adopt a bullish short volatility strategy by selling a $71 strike put and buying two $69 strike puts expiring in ~39 days. With 76% odds of profit and potential returns of 12% (36% annualized), this strategy plays well in the current low volatility environment, allowing for effective capital deployment with a favorable risk-reward profile.

December 11, 2024