Bullish Case: StoneCo's potential recovery hinges on Brazil's economic stabilization. High trading volumes in call options and declining implied volatility suggest renewed investor confidence, indicating a bullish reversal could materialize.

Bearish Case: Persisting economic uncertainty and high implied volatility may continue to weigh on StoneCo's stock. Recent flat and declining price trends from the graphs signal potential for further downside if macroeconomic conditions deteriorate.

Potential Outcomes:

1. 40% chance of recovery if Brazil stabilizes.

2. 35% chance of further declines due to volatility.

3. 25% chance of stagnation if competition intensifies.

Trading Oracle: Given current market conditions, implement a bullish long call spread by buying the STNE 1/17/2025 call at $10.00 and selling the $11.00 call. This strategy capitalizes on potential price recovery while managing risk effectively. Expect high reward due to favorable delta and implied volatility patterns.

November 20, 2024