Price Forecast:

Bullish Case: Eli Lilly's robust pipeline, highlighted by positive clinical trial data and strong historical sales momentum, suggests potential for price appreciation. Additionally, the market sentiment appears to be bullish due to decreased competitive pressures following recent FDA approvals.

Bearish Case: Despite solid fundamentals, recent guidance cut and disappointing sales in obesity drugs could indicate a downturn. Furthermore, high valuations and increasing competition from generics present significant risks, which may lead to price corrections.

Potential Outcomes:

1) Continued strong sales growth (40%);

2) Market correction due to high valuation (30%);

3) Stagnant price movement from external economic pressures (30%).

Trading Oracle: Implement a bullish debit spread using the LLY 11/15/2024 $820/$840 calls. This strategy leverages current elevated implied volatility (38%) and increasing bullish risk. Projected earnings reveal potential for price recovery. Focus on time decay until expiration, balancing growth potential and risk exposure.

November 13, 2024