Bullish Case: UBS's strategic acquisition of Credit Suisse and focus on wealth management could drive substantial growth. The flat term structure and positive historical returns provide a foundation for long-term bullish sentiment.

Bearish Case: Integration challenges from the Credit Suisse merger and legal uncertainties pose risks. The currently high implied volatility suggests market apprehension, which could lead to price corrections.

Potential Outcomes:

• 60%: Successful integration boosts UBS stock significantly.
• 25%: Regulatory hurdles slow growth.
• 15%: Economic downturn impacts performance.

Trading Oracle: Initiate a bullish debit spread using UBS call options expiring in May 2025. Buy the 32.50C and sell the 35.00C to capture upside from merger synergies. Current low volatility offers value; aim for a mid-term horizon, monitoring integration progress. This strategy optimizes risk-reward with potential upside gains.

January 31, 2025