4 Trade Ideas for Eli Lilly: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Eli Lilly, $LLY, pulled back with the market and made a low in March after a period of choppiness. It drove higher from there to a top in April before a pullback. It has made a series of higher highs and high lows since that March bottom. Friday it pushed up on heavy volume, rounding out another higher low.

The RSI is rising into the bullish zone with the MACD rising and about to go positive. There is resistance at 154.50 and 157.30 then 158.75 and 161.35 before 165. Support lower comes at 152.25 and 149.50 then 146. Short interest is low under 1%. The stock pays a dividend with a 1.92% annual yield and it has been trading ex-dividend since August 13th. The company is expected to report earnings next on October 27th.

The October options chain shows the biggest open interest at the 160 and 145 strikes on the put side, but strong size from 150 to 175 on the call side. In the October 30 Expiry open interest is just starting to build. The November chain shows minimal open interest on the put side, but large size at the 160 call strike.

Eli Lilly, Ticker: $LLY

Trade idea 1: Buy the stock on a move over 154.50 with a stop at 151.

Trade idea 2: Buy the stock on a move over 154.50 and add an October 30 Expiry 152.50/145 Put Spread ($3.98) while selling the October 30 Expiry 165 Call ($1.76).

Trade idea 3: Buy the October/November 160 Call Calendar ($3.90) and sell the October 150 Put ($2.35).

Trade idea 4: Buy the November 145/155/165 Call Spread Risk Reversal for $1.05.

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After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with September options expiry ended sees equity markets pulled back after an early start higher.

Elsewhere look for Gold to consolidate in its uptrend while Crude Oil moves higher in the short term. The US Dollar Index looks to continue to consolidate the recent drop while US Treasuries mark time after pulling back slightly in their uptrend. The Shanghai Composite looks to remain in broad consolidation while Emerging Markets consolidate under long term resistance.

The Volatility Index looks to continue the broad trend drifting lower making the path easier for equity markets to the upside. Their charts look weak though, especially the QQQ and SPY. Both are moving lower in both timeframes. The IWM is outperforming both, stable in the short run, and rising in the longer timeframe. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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