Bullish Case: Timken's strategic expansions, particularly in high-growth sectors like renewable energy, could enhance revenue, with historical return patterns indicating a likelihood of price appreciation towards $80 within the next year.

Bearish Case: Ongoing insider selling and heightened implied volatility signal potential underlying issues, risking a downward correction to around $65 if market fears materialize in 2025.

Potential Outcomes:

1. 30% chance of price reaching $80 due to positive market response to strategic initiatives.
2. 50% chance of a price correction to $65 driven by rising concerns over insider selling.
3. 20% chance of severe volatility leading to a drop below $60 exacerbated by macroeconomic factors.

Trading Oracle: Adopt a bearish credit spread by selling the TKR 2025 $75 call while buying the $80 call. Given the current volatility structure, this strategy gains if TKR remains stable or declines at a higher probability of profit due to market sentiment around TKR's insider trends.

December 19, 2024