Options Bulls Just Banked on LLY Stock's Latest Rally

Analysts have started to raise their LLY price targets

by Lillian Currens

Published on Mar 4, 2019 at 3:13 PM
Updated on Mar 4, 2019 at 3:30 PM

Subscribers to Schaeffer's Weekend Trader Series service doubled their money with the Eli Lilly And Co (NYSE:LLY) April 110 call. Here's a quick look at why we expected a big upside move from the pharmaceutical stock, and how the profitable options trade unfolded.

When we entered the position on Monday, Jan. 7, Eli Lilly was sitting 50% above its 2018 lows from February and March -- just north of the $112 level. The shares had pulled back in December, but found a floor at the $109 area, which coincided with its post-earnings breakout from a channel of lower highs back in November. With multiple levels of support in place, more upside from LLY looked promising. 

And although Eli Lilly stock was up 31% year-over-year when we recommended the position, analyst sentiment was still pessimistic. Of the 17 brokerages covering the equity at the time, nine rated it a "hold" or worse. Furthermore, the stock's consensus 12-month price target of $118.19 was only a 3.7% premium to the previous Friday's close. This indicated that bullish analyst attention might serve as tailwinds in the coming months.

In the wake of our recommendation, LLY stock extended its run higher. Analysts began to take note of this impressive price action, too, with the stock receiving post-earnings price-target hikes from BMO, Cantor Fitzgerald and Credit Suisse. In fact, the security only finished two weeks lower since Jan. 6, allowing us to close our position on Tuesday, Feb. 27, and lock in a 100% profit.

LLY Chart Feb 28

START YOUR DAY SMARTER.

Get Schaeffer's pre-market news bulletin every morning before the bell rings.
It's free to sign up.


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 Answer to This Roller Coaster Market
Artificial intelligence may revolutionize trading.
Drug Stock Scales Nasdaq, Squeezes Shorts on Upbeat Trial Data
Cantor Fitzgerald is already bullish on ALDX's big breakthrough
Another Bull Note for Suddenly Red-Hot Nvidia Stock
NVDA has gained 45% since its late-December bottom
The Answer to This Roller Coaster Market
Artificial intelligence may revolutionize trading.