Eli Lilly and Company is a top player in the weight-loss drug market with Mounjaro and Zepbound. Recently, their stock price jumped significantly due to strong earnings. After testing its upward support line, the stock rose 10%, showing the importance of this trendline.
Starting from a low near $620 in September, Eli Lilly has been on a steady rise, reaching close to $1,150. The upward trendline consistently acted as a support level, with buyers stepping in each time to push the price higher. This pattern boosted confidence among analysts and traders.
Before the earnings report, the stock fell back to around $1,107 to test the support line, sparking some uncertainty. However, the market responded strongly with a 10% jump in one day, pushing the stock up 7% into a new range of $1,185-$1,200.
This recent movement reveals the psychology behind stock prices. Those who held or bought during the dip were rewarded. Traders are now seeing the uptrend is solid, with potential resistance between $1,250 and $1,280. This suggests a blend of technical support and strong underlying fundamentals.
Looking back to early 2025, Eli Lilly showed its strength when it moved 10% off the critical trendline near $1,107. That rally confirmed a bullish pattern and indicated positive things ahead. With the stock now above $1,550, it’s clear trusting that support was a great decision.
The fundamentals have only improved, justifying the stock’s rally. For example, Zepbound sales in the last quarter of 2025 exceeded expectations, reaching over $4.5 billion. This helped Eli Lilly secure more than 55% of new weight-loss prescriptions, proving that the trend is driven by strong demand, not just charts.
In the weeks ahead, this momentum suggests buying call options is a good strategy for those who are bullish. Traders might consider options with strikes around $1,600 or higher, set to expire in late March or April to capture the next price increase. This approach benefits greatly from a continued strong market.
Given that the stock’s rise has kept option premiums high, selling cash-secured puts might also be a strategy worth considering. By selling puts at a lower strike price, like $1,480, you can earn a premium while setting a more attractive entry point if the stock pulls back. This is a way to profit from being willing to buy the stock at a lower price.
For those worried about option costs, a bull call spread is a safer alternative. You can buy a $1,550 call and sell a $1,600 call at the same time, which helps to finance the position and limits potential profits. This strategy reduces upfront costs and is effective in a rising market.
As we approach the next earnings report in April, we should monitor implied volatility. Expect option premiums to rise in the weeks before the announcement. This creates opportunities to position yourself before the event or to sell premiums in anticipation of expected price movements.
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