Bullish Case: Despite regulatory challenges, a potential easing of restrictions and positive adjustments from Weibo's financial outlook could ignite a strong rebound in WB's stock, further supported by increased user engagement and institutional investment.

Bearish Case: Continued stringent regulations and negative public sentiment may stifle user growth for Weibo, leading to depressed advertising revenue and further declines in WB's stock price, with high volatility expected from resulting uncertain market conditions.

Potential Outcomes:

1. Easing regulations might lead to a 45% chance of stock recovery to $10 (30%).

2. Persistent regulatory pressures could result in a 40% drop to $5 (50%).

3. A flat market situation is likely (20%).

Trading Oracle: Given the current volatility environment, consider a bullish long volatility position by buying WB $10 calls while selling $12.50 calls expiring in 154 days. This strategy could harness potential price recovery towards positive events while managing risk effectively. Alternatively, a short volatility strategy with credit spreads remains plausible if market conditions stabilize around $8.35.

November 17, 2024