Today’s tickers: LLY, NTES & HIG
LLY - Eli Lilly and Co. – Shares in the world’s 10th largest pharmaceutical company touched a fresh three-year high of $44.27 today and remain in positive territory, up 0.35% at $44.00 as of 11:20 a.m. in New York, as major U.S. equity benchmarks rebound off earlier declines amid Fed Chairman Ben Bernanke’s Q&A session with the Senate Banking Committee. Options activity on the drug maker today suggests one or more traders may be locking in Lilly’s share price gains in case the stock falters somewhat during the next couple of months. It looks like a 1,100-lot Sept. $39/$43 put spread was purchased this morning for an average net premium of $1.32 per contract. The debit put spread may represent protective positioning by a trader or traders seeking to hedge long stock in LLY, or an outright bearish bet that the shares may pullback by expiration. Profits – or downside protection – kick in on the spread in the event Lilly’s shares decline 5.3% to breach the average breakeven price of $41.68. Maximum potential profits of $2.68 per contract are available on the position should the drug maker’s shares drop 11.4% to trade at or below $39.00 come September expiration. Meanwhile, trading traffic in Lilly call options indicates some strategists may anticipate fresh multi-year highs for the stock this year. One bullish player appears to have rolled a 500-lot long call position from the July $44 strike out to the Sept. $44 strike to extend optimism on the name. Traders betting on a far larger move to the upside snapped up around 480 calls at the Sept. $50 strike for an average premium of $0.68 apiece. The $50 calls may be profitable at expiration if shares in Eli Lilly and Co. jump 15% over the current price of $44.00 to top $50.68. The company is scheduled to report second-quarter earnings ahead of the open next Wednesday.
NTES -…
