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Price Forecast:

Bullish Case: SVC may benefit from rising hotel occupancy and a strategic focus on high yield properties, potentially reversing its downtrend if operational efficiencies improve.

Bearish Case: Ongoing cash burn and significant debt obligations raise concerns about SVC’s ability to maintain dividends, leading to further stock price declines and a negative market sentiment.

Potential Outcomes:

1. Dividend cut (40%);

2. Stabilization and recovery in hotel performance (30%);

3. Continued decline due to structural issues (20%);

4. Unexpected market rally (10%).

Trading Oracle: Consider initiating a bearish position using credit spreads on short-dated puts due to elevated implied volatility and a high likelihood of temporary price declines. Target moderate profit while managing risk. Focus on SVC 09/20/2024 2.50 P for lower capital requirements.

August 27, 2024