How To Earn 9.2% Yield While Waiting to Buy LLY 30% Cheaper
At about $939.47 a share, Eli Lilly (LLY) is trading about 15% 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 $660 per share? If you think that is a steal, and have some cash ready to go, here is a trade.
9.2% 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 $660
- Collect roughly $3,227 in premium per contract (each contract represents 100 shares)
- That’s about 5.2% annualized yield on the $66,000 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 9.2%
- And you give yourself a chance to buy LLY stock at deep discounted price of $660
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.
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Possible Trade Outcomes: You Win Either Way
| Stock Price Outcome | What It Means For You |
|---|---|
| LLY stays above $660 | You keep the full $3,227 premium – 4.9% extra income over the next 343 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 $660 | You’ll be obligated to buy 100 shares at $660. But thanks to $3,227 premium, your effective cost basis is just $627.73 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.
Portfolios Beat Stock Picking
Individual stocks are unpredictable. A smart portfolio helps you invest, limits downside shocks, and provides upside exposure.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? HQ Portfolio has posted more than 105% in cumulative return since inception, with less risk versus the benchmark index, as evident in HQ Portfolio performance metrics.