4 Trade Ideas for Eli Lilly: Bonus Idea

• Posted by Greg Harmon
• on November 4th, 2019

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

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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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 another FOMC meeting in the books and the calendar turning to November sees equities are breaking to new highs.

Elsewhere look for Gold to consolidate in its uptrend while Crude Oil consolidates as well. The US Dollar Index is consolidating at support in a rising channel while US Treasuries consolidate in their downtrend. The Shanghai Composite continue in a tightening consolidation while Emerging Markets move to the upside in their broad consolidation.

Volatility has eased and looks to remain very low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. The SPY and QQQ both broke ranges and are looking strong as the make new all-time highs while the IWM approaches the top of its long wide consolidation. 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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