Price Forecast:

Bullish Case: SQ's recent stability amidst an overall recovery in digital payment adoption signals a potential upward trajectory, particularly with strong bullish sentiment reflected in high call option volumes and favorable market conditions.

Bearish Case: Continued regulatory scrutiny and rising competition threaten SQ's profitability, compounded by increased operational costs that may restrict growth and depress stock performance in the near term.

Potential Outcomes:

• Growth in digital adoption: 60% likelihood
• Regulatory headwinds: 30% likelihood
• Negative earnings surprise: 25% likelihood
• Strong revenue growth impacting margins: 50% likelihood
• Increased competition limiting market share: 40% likelihood

Trading Oracle: Implement a bullish debit spread by buying SQ 12/20/2024 $95 calls and selling $100 calls. This strategy capitalizes on elevated implied volatility (around 50%) while targeting short-term gain potential as SQ stabilizes after recent fluctuations, maximizing reward and maintaining a defined risk profile.

December 17, 2024