Price Forecast:

Bullish Case: TEVA's current implied volatility trend suggests potential upward movement as market sentiment improves. Strong call option activity reflects increasing bullish sentiment and a favorable upcoming litigation resolution could drive the price higher.

Bearish Case: High put volume indicates significant market skepticism amid ongoing litigation risks. Historical performance and elevated implied volatility may hinder recovery, suggesting further declines are possible as overall sentiment remains cautious.

Potential Outcomes:

1) TEVA engages in a favorable litigation outcome (40%);

2) Ongoing litigation pressures continue and push prices down (30%);

3) Stagnant performance around current levels (30%).

Trading Oracle: Consider initiating a bullish debit spread by buying TEVA 17.00C and selling TEVA 18.00C, capitalizing on current elevated implied volatility. Target a horizon of 30 days for optimized risk-reward, as implied volatility may decline post-litigative events. Maintain a close watch on upcoming legal outcomes.

November 17, 2024