Weight-loss drug tirzepatide reduced the risk of progression to type 2 diabetes
Eli Lilly And Co (NYSE:LLY) announced today preliminary results from a late-stage study indicated the main ingredients Zepbound and Mounjaro of weight-loss drug tirzepatide reduced the risk of progression to type 2 diabetes by 94%. Additionally, patients saw weight reduction of about 15% to 23%, depending on drug dosage.
In response, LLY is up 2.4% to trade at $943.22 at last check. The shares are bouncing off a pullback from a July 15, record high of $966.10 to the $740 region, with a newfound floor at the $920 level. So far in 2024, the pharmaceutical stock has added more than 61%.
Short-term options traders have been more bearish than usual, per the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.07, which sits in the 92nd percentile of readings from the past 12 months. An unwinding of this pessimism could generate additional tailwinds for LLY.
That shift in sentiment appears to be already underway, with 36,000 calls across the tape so far today -- seven times the intraday average volume -- compared to just 9,070 puts. The most popular contract is the weekly 8/23 975-strike call, with positions being bought to open there.
It's worth noting that the security boasts attractively priced premiums, with its Schaeffer's Volatility Index (SVI) of 26% standing higher than just 16% of annual readings. In simpler terms, options traders are pricing in low volatility expectations.