Bullish Case: WBA's acquisition by Sycamore Partners may infuse fresh capital and strategic flexibility, potentially revitalizing its operations and enhancing profitability. The healthcare expansion initiatives support a positive growth trajectory.

Bearish Case: Ongoing regulatory challenges, store closures, and competition from online retailers pose significant hurdles. The DOJ lawsuit and high debt levels exacerbate financial strain, threatening further declines.

Potential Outcomes:

• 30% chance of strategic refocus under Sycamore leading to recovery.
• 50% chance operational challenges and DOJ lawsuit cause price declines.
• 20% chance unexpected events trigger speculative gains.

Trading Oracle:

Implement a Bearish Short Volatility strategy. WBA faces regulatory and competitive pressures with high implied volatility. Selling ATM call options and buying more OTM call options maximizes benefit from market uncertainty, offering a 53% potential return. Target a high edge to leverage current market sentiment.

March 18, 2025