Eli Lilly, $LLY, started to move higher in December and ran to a top in March. From there it pulled back, retracing 61.8% of the move up, and consolidated. It continued lower 6 weeks later, eventually dipping down to a 113% extension of the up leg before reversing. It is now approaching the 61.8% level again, coinciding with the 200 day SMA.
As it moves higher the RSI is rising to the bullish zone with the MACD rising and positive. Momentum has turned to the upside. There is resistance at 116 and 119 then 120 and 123 before 125.25 and 128. Support lower comes at 110 and 109 then 107 before 106. Short interest is low at 1.2%. The stock pays a dividend with an annual yield of 2.29% and it begins trading ex-dividend on November 14th. The company is expected to report earnings next on January 30th.
The November options chain shows big open interest at the 105 and 104 strikes, but also the 110 strike on the put side. The call side is smaller but found at 114 and 115 then 110. December options open interest is very large at the 115 call. In the January chain open interest on the call side is spread from 110 to 140, while on the put side is focused at 110, 100 and 90. In the April chain, the first to cover the next earnings report, open interest is still building.
Eli Lilly, Ticker: $LLY
Trade Idea 1: Buy the stock on a move over 116.50 with a stop at 113.75.
Trade Idea 2: Buy the stock on a move over 116.50 and add a December 115/105 Put Spread ($4.00) while selling the January 120 Call ($1.14).
Trade Idea 3: Buy the November/January 115 Call Calendar ($2.10) and sell the December 105 Put ($1.00).
Trade Idea 4: Buy the January 100/115/120 Call Spread Risk Reversal (90 cents).
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