4 Trade Ideas for Lilly: Bonus Idea

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

Eli Lilly, $LLY, made a top in December and then started to move lower. It found support at the 200 day SMA and just over a 50% retracement of the move up from April last year. It has held there in consolidation since. It ended last week pressing on resistance with the Bollinger Bands® opening higher. The RSI is rising on the edge of a turn to bullish with the MACD lifting towards a cross to positive.

There is resistance at 251 and 257 then 263 and 271 before 279.50 and 284. Support lower comes at 246.50 and 241 then 236 and 234.50. Short interest is low under 1%. The stock pays a dividend with an annual yield of 1.56% and started trading ex-dividend on February 14th. The company is expected to report earnings next on April 8th.

The March options chain shows largest open interest at the 240 strike on the put side and the 250 strike on the call side. In the April 8 Expiry there is little open interest, but the at-the-money straddle is pricing a $20 move. The April monthly options show open interest spread from 260 down to 210 on the put side, biggest at 230. On the call side it is focused at 270 and 250.

Eli Lilly, Ticker: $LLY

Trade Idea 1: Buy the stock on a move over 252 with a stop at 246.

Trade Idea 2: Buy the stock on a move over 252 and add an April 240/230 Put Spread ($3.10) while selling the April 280 Put ($1.55).

Trade Idea 3: Buy the April/May 260 Call Calendar ($4.95) while selling the April 230 Put ($3.65).

Trade Idea 4: Buy the May 230/260/280 Call Spread Risk Reversal (25 cents).

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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 one trading day left in February saw equity markets showed late week strength overcoming a geopolitically driven sell off and ending at the highs Friday.

Elsewhere look for Gold and Crude Oil to possibly pause in their uptrends after printing reversal candles. The US Dollar Index continues to trend to the upside while US Treasuries trend lower. The Shanghai Composite looks to continue in broad consolidation while Emerging Markets remain in a downtrend.

The Volatility Index looks to remain elevated putting a headwind up against the equity markets’ nascent recovery. Their charts look hopeful on the shorter timeframe. On the longer timeframe both the QQQ and IWM still look weak in short term trends lower. The SPY looks the best holding at the lower end of a 19 month range. 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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