What is the potential effect of the proposed settlement on Olaplex’s share price and volatility?

Impact on price – The settlement removes a lingering legal‑risk head‑line that has been keeping a “risk‑discount” on Olaplex’s equity. With the class‑action exposure resolved, the market typically re‑rates the stock higher – roughly 3‑5 % in the immediate aftermath – as investors replace the “unknown” with a known, finite exposure (i.e., a defined cash outlay rather than an open‑ended liability). Because the settlement is a non‑cash, mutually‑approved agreement that merely caps the claim, there is little expected drag on the balance sheet, so the fundamental upside outweighs any modest cash‑flow hit.

Impact on volatility – Legal‑uncertainty is a primary driver of Olaplex’s historical intraday swings; once the case is closed, the implied‑volatility (IV) premium on options contracts should contract sharply. Expect a 20‑30 % reduction in the 30‑day IV skew and a narrowing of the Bollinger‑Band width over the next 2‑3 weeks as the “black‑swans” that previously inflated the premium are removed. The net effect will be a tighter price range and lower option‑priced risk, which often lures short‑term sellers and short‑term holders alike.

Trading take‑away – Short‑term: Go long on the post‑settlement dip (e.g., 5–10 % below the settlement‑reactive bounce) with a tight stop just below the recent low to capture the expected 3–5 % upside. Medium‑term: If you’re risk‑averse, consider scaling in as IV compresses; the tighter volatility makes a “buy‑the‑dip” position cheaper in terms of optional‑costs. Conversely, if you already own Olaplex, you may want to trim the stop‑loss tighter than usual because the new lower‑IV environment reduces the probability of a large‑down‑side move. Overall, the settlement should be a price‑support catalyst with a moderating effect on volatility, offering a short‑duration upside with a clearer risk‑profile.