Pharmaceutical stocks have been surging the past two sessions
Pharmaceutical concern Eli Lilly And Co (NYSE:LLY ) is charging 7.2% higher to trade at $821.20 this afternoon. Starting today, President Trump imposed a 100% tariff on branded or patented pharmaceutical products that enter the country. However, Eli Lilly (LLY) is exempt from the levies amid a $27 billion dollar expansion of manufacturing facilities in the U.S. The stock is also seeing a halo lift from the broader pharmaceutical sector after Pfizer's (PFE) deal with Trump.
LLY earlier touched its highest mark since June as it heads for a fourth-straight win and its best daily percentage gain since April. The shares are now facing off with the 320-day moving average, a site of resistance as recently as July. Eli Lilly stock remains 7.1% lower year-over-year.
LLY options have been a favorite for call traders both today and over the past 10 weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Eli Lilly stock's 50-day put/call volume ratio of 1.85 ranks higher than all other readings from the past year.
Echoing this, 124,000 calls and 44,000 puts have changed hands on the pharma giant so far today. This is running at quadruple the average daily rate, with the weekly 10/3 800- and 820-strike calls most popular. These are being bought to open and set to expire at the close this Friday.
These options can be had for a bargain, too. This is per the security's Schaeffer's Volatility Index (SVI) of 31%, which ranks in the low 17th percentile of its annual range. In other words, traders are pricing in low volatility expectations.