Call Traders Swarm Surging Eli Lilly and Co (LLY)

Eli Lilly and Co reached a deal with Zosano Pharma Corp. today

by

Published on Dec 2, 2014 at 2:19 PM
Updated on Apr 20, 2015 at 5:09 PM

Eli Lilly and Co (NYSE:LLY) is surging on an agreement to develop Zosano Pharma Corp.'s osteoporosis treatment, ZP-PTH. At last check, the shares were 3% higher at $70.57, after earlier reaching a 10-year peak of $70.77. Not surprisingly, calls are flying off the shelves at quadruple the normal intraday clip, and short-term strikes are being targeted, as LLY's 30-day at-the-money implied volatility (IV) has risen 4.2% to 15%.

Digging deeper, the pharmaceutical giant's most active option is the weekly 12/5 68.50-strike call, where north of 2,400 contracts have been exchanged. More than three-quarters have crossed at the ask price, and volume outstrips open interest, collectively hinting at buy-to-open activity.

Traders paid a volume-weighted average price (VWAP) of $1.31 for the in-the-money calls. As such, breakeven at this Friday's close -- when the weekly series expires -- is $69.81 (strike plus VWAP). As alluded to, Eli Lilly and Co (NYSE:LLY) is presently perched above this level, suggesting today's buyers are already staring at potential paper profits.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


The Nevada Discovery That Could Jeopardize Chinese Dominance
Click to continue to advertiser's site.
Billion-Dollar AT&T Loan Boosts Stock
T announced at $5.5 billion term-loan agreement today
SHOP Stock Fails to Shake Off Downgrade
Raymond James downgraded Shopify to "market perform" from "outperform"
The Nevada Discovery That Could Jeopardize Chinese Dominance
Click to continue to advertiser's site.