What Thursday's Earnings Mean for This Pharma Giant

Core Viewpoint - Eli Lilly (LLY) is expected to report earnings soon, with the options market indicating significant anticipated movements in the stock price [1] Options Positioning - The options positioning for LLY has shifted from neutral to fully bullish as of now, with bulls targeting a major upside strike at $900 [3] - The largest open interest for February options shows 1,365 calls at the $800 strike, which is the top gamma strike (TGS) and indicates strong market consensus on this level [4][5] - There is a notable lack of put gamma above $800, suggesting that bulls may attempt to push the stock towards $900 if earnings exceed expectations [5] Option Flows - Recent option flows indicate a bullish sentiment, primarily driven by traders closing long puts and selling puts, which has provided a short-term boost to LLY's stock price [6] - On the call side, traders are taking profits by selling calls ahead of the earnings report, with more put selling than call selling contributing to the upward price movement [7] Price Action - The $800 TGS level has shown strong support, holding pullbacks multiple times since late January, indicating a solid base for potential upward movement [8] - The implied move for LLY's earnings is currently estimated at $45, which may adjust to around $37 after accounting for theta decay, suggesting potential price targets of approximately $860 or $788 post-announcement [9][11] Trading Strategy - The company has established a bullish position and may consider booking deep out-of-the-money puts as insurance, with plans to close positions if the stock rises significantly [12]