LLY Options Signal Bullish Bias at $1120–$1000 Range: Trade Setup for Volatility Play as Price Cuts Spark Strategic Moves

• Eli Lilly (LLY) trades at $1,062.1, down 1.24% from its 52-week high of $1,112.
• Options data shows heavy call open interest at $1,120 and $1,200 (this Friday’s expiry), while puts dominate at $1,000 and $1,030.
• Price cuts for Zepbound aim to boost market share but risk short-term revenue concerns.

Here’s the takeaway: LLY’s options activity and technicals point to a bullish bias with caution below $1,058.74. The stock is testing key support/resistance levels as price cuts and competitive pressures reshape investor sentiment. Let’s break it down.

Bullish OI Clusters and the Shadow of Hedging

The options chain tells a story of optimism and hedging. For this Friday’s expiry (2025-12-05), LLY20251205C1120 and LLY20251205C1200 calls lead with 913 and 882 open interests respectively—strikes well above the current price. This suggests traders are betting on a short-term rebound, possibly driven by Zepbound’s market expansion. Conversely, puts like LLY20251205P1000 (OI: 1,283) and LLY20251205P1030 (OI: 1,254) show heavy hedging below $1,050. The put/call ratio of 0.85 (calls > puts) reinforces a net bullish stance, but the concentration of puts near $1,000 warns of potential downside risks if the stock fails to hold above $1,058.74.

Block trading is absent today, so the options activity likely reflects retail and institutional positioning ahead of expiry. The key takeaway? Bulls are stacking up near $1,120, but bears are bracing for a drop below $1,000.

Price Cuts as a Double-Edged Sword

Eli Lilly’s Zepbound price reductions for single-dose vials—announced today—aim to boost patient access but could pressure near-term revenue. The stock’s 0.8% drop reflects investor concerns about margin compression, even as the move aligns with Trump-era drug pricing agreements. Analysts are split: some see this as a strategic win in the GLP-1 drug race against Novo Nordisk, while others worry about profit dilution.

The options market seems to agree with the bullish narrative. High call open interest suggests traders expect the stock to rebound on improved market share, not just short-term earnings. However, if insurance companies or Medicare/Medicaid adjust coverage slowly, the $1,050–$1,030 support zone (200D moving average: $807.69) could become a battleground.

Actionable Trades: Calls, Puts, and Precision Entries

For options traders:

• Bullish Play: Buy LLY20251205C1120 (strike: $1,120, expiry: Dec 5) if LLY breaks above its intraday high of $1,084.15. The RSI at 81.50 hints at overbought conditions, but the MACD histogram (3.90) suggests momentum could push higher.
• Bearish Hedge: Buy LLY20251205P1000 (strike: $1,000) if the stock dips below $1,058.74. The 200D Bollinger Band at $857.72 is far away, but the 30D support at $1,016.83 could act as a buffer.

For stock traders:

• Entry near $1,016.83 (30D support) with a stop-loss below $1,000. Target zones are $1,084 (intraday high) and $1,120 (call-heavy strike).
• Alternative: Sell short above $1,084 if the RSI (81.50) triggers a correction, but only if the 200D MA ($807.69) isn’t breached.

Volatility on the Horizon

The coming days will test LLY’s resolve. A break above $1,084 could validate the bullish case, while a drop below $1,050 might force a reevaluation of the price-cut strategy. With Zepbound’s multi-dose pens still awaiting FDA approval, the stock’s trajectory hinges on balancing market share gains with profit sustainability. For now, the options market is pricing in optimism—but not without caution. Stay nimble, and watch those $1,120 calls like a hawk.