Collect 9.8% On LLY Stock Now, Own It 30% Cheaper If It Dips

Here is a way to get paid a significant income stream today from Eli Lilly stock, which you keep no matter what, while setting a price far below current levels where you would be willing to buy.

Eli Lilly (LLY) has been on an astonishing run, trading near all-time highs after reporting a stunning 56% revenue jump in its latest quarter. For investors who are understandably hesitant to chase a stock after that kind of performance, there is another way to engage: get paid a healthy income stream right now to simply name your price, far below today’s level, at which you would be happy to step in and buy. The specifics of that trade are laid out below.

9.8% annualized yield at a 30% margin of safety, by selling put options.

• Sell a put option on LLY expiring 6/17/2027, with a strike price of $840.
• Collect roughly $3,588 in premium per contract (each contract covers 100 shares).
• That works out to about 4.8% annualized on the $84,000 of cash you set aside to secure the trade.
• Park that cash in a money market or savings account earning roughly 5.0%, and your total yield climbs to about 9.8%.
• And if LLY falls below $840, you buy it at $840, an effective entry near $804.13 a share after the premium, about a 33% discount to today’s $1196.03.

Two Outcomes, You Keep The Premium Either Way

If LLY stays above $840 through 6/17/2027, the put expires worthless, and you simply keep the full $3,588 premium. That is about 4.3% on the $84,000 you set aside over 328 days, while that same collateral keeps earning the ~5.0% money-market yield on top, for the ~9.8% total above. You never buy the stock and keep the income, free to do it again.

If LLY closes below $840, you are assigned and buy 100 shares at $840. The $3,588 premium you already pocketed lowers your effective cost to about $804.13 a share, roughly a 33% discount to today’s price, though if the stock has fallen further by then you would be holding a paper loss.

So what happens if LLY really does close below $840, and you are the one buying? Then everything rests on a single question.

Would You Want To Own LLY On Sale?

Because this trade could end with you owning the shares, the real question is whether you would be comfortable holding this business for the long term. On one hand, the growth is undeniable. The company’s key cardiometabolic drugs saw their combined global revenue hit $12.8 billion in the first quarter, and management was confident enough to raise its full-year revenue guidance by $2 billion. The story here is one of massive, volume-driven demand that is still in its early innings.

Even the launch of its new oral drug appears to be expanding the market rather than just stealing share. Management noted that 80% of its initial prescriptions are from patients who are new to the class of therapy, suggesting Lilly is tapping into a whole new segment of demand. This is the engine that has powered the stock to its current heights: a product portfolio that is redefining a massive market and pulling in new customers at a torrid pace.

On the other hand, the market is laser-focused on the cost of that growth. As one analyst on the earnings call put it, investors are “acutely focused on pricing.” That concern is well-founded. In the U.S., Lilly’s prices declined 10% in the first quarter, excluding a one-time adjustment. More importantly, the company projects that price will be a “headwind in the low to mid-teens for the full year.” At the same time, securing broad insurance coverage from employers remains a challenge. As the CEO acknowledged, getting employers to cover therapy for a condition as widespread as obesity won’t be a “straight line,” because as the newest major cost, “it’s easier to say no to.”

This is the core tension for an investor today: spectacular volume growth running headlong into significant price and access friction. The appeal of this trade is that it pays you to watch that drama unfold from a comfortable distance. You collect your income upfront, and if the stock does pull back under the weight of those pressures, your entry point is set at a meaningful discount to today’s price. The one thing to watch is that price headwind. How that guided “low to mid-teens” figure evolves through the year will be the clearest signal of whether volume is truly winning the war.

Wondering whether another stock offers a better yield, or what this same trade would pay on a name you already like? You can screen the latest cash-secured put yields across the market for yourself. And if it is exposure to healthcare as a whole you want rather than this one name, a healthcare ETF like XLV covers that single sector. Going broader than any one sector, to a quality-first mix across the whole market, is where the portfolio below comes in.

Before You Commit To Buying More Of One Stock, Know How Much You Already Carry

A put sale is a promise to add to a single name, and the first thing a professional checks before that promise is existing exposure, because concentration is what turns an income trade into an oversized bet. That check is exactly what the Trefis Wealth team provides, with the same rules-based systematic discipline that runs our High Quality Portfolio. Request a free vulnerability audit of your biggest positions.