Eli Lilly Stock Surges on Billion-Dollar Acquisition, Upbeat Forecast

LLY options can be had for a pretty penny, too

Digital Content Manager
Dec 15, 2020 at 10:04 AM
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The shares of Eli Lilly And Co (NYSE:LLY) are up 1.9% at $160.83 at last check, after the pharmaceutical giant said it would buy Prevail Therapeutics (PRVL) for $1.04 billion, in an effort to expand its presence in the lucrative field of gene therapy. In addition, the company announced a better-than-expected 2021 financial forecast, and updated its 2020 guidance to reflect roughly $24.7 billion in revenue -- well above Wall Street's estimates.

Digging deeper, Eli Lilly stock has experienced its fair share of volatility over the past several months. The shares climbed all the way to a July 9 all-time-high of $170.75. And by November, LLY was back near $130, which roughly coincides with its year-to-date breakeven level. Nevertheless, the equity is up 22.4% in 2020, with this recent stretch of gains supported by its ascending 10-day moving average and a longer-term bullish trendline.

There's optimism abound in the options pits, where calls are king. This is per the the security's 10-day call/put volume ratio of 3.88 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 95% of readings from the past year. In simpler terms, calls are being picked up at a quicker-than-usual clip.

It's more of the same today, with calls trading at double the average intraday amount. Leading the charge this morning is the November 155 call, where buy-to-open activity is suspected.

Now could be an opportune time to take advantage of the security's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 32% sits in the relatively low 24th percentile of its annual range. This means LLY currently sports attractively priced premiums.


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