The Smart Way to Own LLY: Collect 8.8% Before You Even Buy
At about $906.7 a share, Eli Lilly (LLY) is trading about 18% below its 52W high.
Do you think LLY stock is a good long-term bet at current levels? What about at a 30% discount at about $640 per share? If you think that is a steal, and have some cash ready to go, here is a trade.
8.8% annualized yield at 30% margin of safety, by selling Put Options.
- Sell a long-dated Put option expiring 3/19/2027, with a strike price of $640
- Collect roughly $3,090 in premium per contract (each contract represents 100 shares)
- That’s about 4.8% annualized yield on the $64,000 you’re setting aside for the possibility of buying the stock
- This cash parked in a savings or money market account will earn an extra 4.0%, taking total yield to 8.8%
- And you give yourself a chance to buy LLY stock at deep discounted price of $640
However, this is not the only stock strategy in town. Trefis High Quality Portfolio is a sophisticated framework designed to reduce stock-specific risk while giving upside exposure.
Possible Trade Outcomes: You Win Either Way
| Stock Price Outcome | What It Means For You |
|---|---|
| LLY stays above $640 | You keep the full $3,090 premium – 4.8% extra income over the next 364 days on cash that might otherwise earn you 4.0% or less. You never buy the stock and simply walk away with the cash. |
| LLY closes below $640 | You’ll be obligated to buy 100 shares at $640. But thanks to $3,090 premium, your effective cost basis is just $609.1 per share – a roughly 33% discount from current level. |
But to hold this trade with conviction, you want to see long term upside in the stock. Because if it comes to it, you want to be excited about buying the stock cheap.
Check out Buy or Sell LLY Stock and Eli Lilly Investment Highlights
If you are not comfortable with options or stock-specific trades, Portfolios are the way to go as they can protect and grow wealth even better.
The Best Investors Think In Portfolios
Individual stocks can soar or tank but one thing matters: staying invested. The right portfolio can help you stay invested, capture upside and mitigate the downside associated with any individual stock.
Why settle for average market returns? The Trefis High Quality (HQ) Portfolio invests in a diverse group of 30 stocks that have collectively delivered stronger upside with reduced volatility compared to the broader indices. Discover the methodology behind these smoother, higher returns by checking the HQ Portfolio performance data.