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Price Forecast:

Bullish Case: Improved operational efficiencies from the TGS-PGS merger and strong strategic demand could drive TGS prices upwards, particularly with the upcoming Capital Markets Day on August 29, 2024, likely boosting investor sentiment.

Bearish Case: If the market faces rising interest rates or geopolitical tensions, TGS could be negatively impacted given its exposure, leading to potential declines in stock price despite its recent advancements.

Potential Outcomes:

1. Price reaches $22.5 (40% chance) due to optimistic merger synergies.

2. Stabilizes around $15 (30% chance) as mean reversion continues.

3. Falls to $17 (30% chance) if macroeconomic conditions worsen.

Trading Oracle: Execute a bullish debit spread by buying TGS call options at a $20 strike and selling $25 calls. This leverages elevated implied volatility, offers a defined risk profile, and aligns with a medium-term upward price outlook. Explore positions expiring around the October 2024 expiration.

August 21, 2024