4 Trade Ideas for Eli Lilly: Bonus Idea

• Posted by Greg Harmon
• on January 29th, 2024

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

Eli Lilly, $LLY, comes into the week approaching the all-time high set 2 weeks ago. It has a RSI holding in the bullish zone with the MACD leveling after a pullback and positive. There is no resistance above 644. Support lower sits at 621 and 603. Short interest is low under 1%. The stock pays a dividend with an annual yield of 0.81% and will start trading ex-dividend February 14th. The company is expected to report earnings next on February 6th.

The February 9 Expiry options chain suggest a move of about $43 between now and expiry, or 6.7%. The February chain shows biggest open interest at the 600 strike put then 550 and 580. On the call side it is biggest at the 620 strike but closely followed by 600 and 650. The March chain has open interest spread from 550 to 600 on the put side and from 600 to 700 on the call side. April options have biggest open interest at the 570 put and 700 call strikes.

Eli Lilly, Ticker: $LLY

Trade Idea 1: Buy the stock on a move over 645 with a stop at 620.

Trade Idea 2: Buy the stock on a move over 645 and add a February 9 Expiry 625/595 Put Spread ($9.50) while selling the February 9 Expiry 675 Call (8.50).

Trade Idea 3: Buy the February/March 680 Call Calendar ($6.10) and sell the February 590 Put ($5.85).

Trade Idea 4: Buy the April 590/650/700 Call Spread Risk Reversal ($4.20).

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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 just 3 trading days left in January, equity markets look ready to finish the month higher.

Elsewhere look for Gold to continue its pullback while Crude Oil reverses higher. The US Dollar Index looks to drift sideways in consolidation while US Treasuries continue their downtrend. The Shanghai Composite looks to extend the bounce to the upside while Emerging Markets continue in consolidation.

The Volatility Index looks to remain very low and stable making the path easier for equity markets to the upside. The charts of the SPY and QQQ look strong, especially on the longer timeframe. On the shorter timeframe both the QQQ and SPY could end up rolling over to reset momentum measures as both are extended. If that happens it might be time for the IWM to finally take the lead and test the 20 month channel consolidation. Use this information as you prepare for the coming week and trad’em well.

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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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