Price Forecast:

Bullish Case: Strong insider purchases and expected positive contracts could drive WWD upward. The current implied volatility suggests that traders anticipate significant movements, favoring a bullish sentiment in response to upcoming earnings.

Bearish Case: Ongoing reputational concerns and high implied volatility could foment bearish sentiment. Uncertainty about contracts due to legal risks may deter investors, leading to potential downside in stock performance.

Potential Outcomes:

• Positive earnings surprise boosting stock (40% probability).
• Continued reputational issues leading to declines (30% probability).
• New contracts driving growth with high likelihood (50% probability).
• Market volatility causing short-term fluctuations (-20% impact, 40% probability).

Trading Oracle: Consider a bullish debit spread by buying WWD 01/17/2025 175C and selling 180C. Given recent high insider buying activity, this strategy capitalizes on the anticipated uptick in price, while minimizing risk from ongoing volatility. Focus on short-term trends, aiming for manageable loss exposure and enhanced profit potential.

December 18, 2024