Eli Lilly Stock Looks Good for Call Buyers

The shares could move even higher with a round of analyst upgrades

Nov 20, 2018 at 1:44 PM

The shares of pharmaceutical firm Eli Lilly and Co (NYSE:LLY) gapped higher in mid-November on news the company submitted a new drug application for its migraine treatment to the Food and Drug Administration (FDA). This pop brought the shares back above the $111 level, which is 50% above the stock's 2018 closing low of $74.21 from Feb. 8. Plus, LLY is trading north of a trendline connecting lower highs over the past month, which could serve as support going forward.

A round of well-deserved upgrades could help the shares add to their nearly 35% year-to-date lead, considering nine of 18 analysts still maintain a lukewarm "hold" rating on LLY.

Now appears to be an attractive time to purchase premium on near-term LLY options, too, with its 30-day at-the-money implied volatility of 20.2% in line with the broad market. Lastly, the leverage ratio on our recommended call option is 8.78, and will double in value on an 11.2% gain in the underlying equity.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this LLY commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Follow @Schaeffers

The $25K Day Trading Barrier is Gone

The long-standing Pattern Day Trader (PDT) rule that required many traders to maintain a $25,000 account balance is no longer standing in the way.

That means more traders can actively pursue short-term opportunities without the barrier that kept so many on the sidelines.

Now it's all about having the right strategy.

Dynamite Day Trading Signals helps you hit the ground running with up 2 options trade alerts per week, built to capture fast-moving opportunities.

👉 Sign up now to receive the next trade