LLY Stock: Collect 12% Now, In Exchange For Capping Upside At 15%

Here is a way to get paid a meaningful income now on your Eli Lilly shares, income you keep no matter what the stock does, in exchange for agreeing to sell at a price above today’s if it climbs there.

Eli Lilly (LLY) has been on a historic run, powered by a new class of medicines that have reshaped the pharmaceutical landscape and sent its stock soaring. But after that climb, the stock now trades about 7% below its 52-week high, leaving investors to wonder if the easy money has been made. For those who own the shares and are happy with their gains but want to generate some cash from the position, there is a straightforward trade that pays you an income upfront for your patience.

12% annualized income on LLY shares you already own, with 15% of upside room, by selling a covered call.

• You own (or buy) 100 shares of LLY near today’s price of $1154.97.
• Sell one call option on LLY expiring 6/17/2027, with a strike price of $1330, about 15% above today.
• Collect roughly $12,145 in premium up front per contract (each contract covers 100 shares), which you keep no matter what the stock does.
• That premium is about 12.0% annualized on the $115,497 of stock, income you earn just for holding.
• If LLY finishes above $1330, your shares are called away at $1330. Counting the premium, your total return works out to about 30% annualized, but you give up any gains above the strike.

Two Outcomes, You Keep The Income Either Way

If LLY finishes below $1330 on 6/17/2027, the call expires worthless, and you keep the full $12,145 premium and all your shares. That is about 11% over 322 days, income earned just for holding, and you are free to sell another call.

If LLY finishes above $1330, your 100 shares are called away at $1330. You still keep the $12,145 premium, and counting it your total gain works out to about 26% over the holding period (about 30% annualized), a healthy exit. The cost of the trade is that any gain above $1330 is no longer yours. And if the stock instead falls, you keep the premium but still ride the shares down, cushioned only slightly.

So the whole trade comes down to one thing: how much of that upside are you really likely to give up, and would you be content to sell at that higher price?

Would You Be Happy To Sell LLY Higher?

The trade’s only real cost is that it caps your potential gains. So, how much upside are you really giving up? The bull case is simple and powerful: sheer, overwhelming growth. The company’s revenue grew 56% in the first quarter, and management was confident enough to raise its full-year revenue guidance by a cool $2 billion. The story here is that Lilly’s volume growth is so immense, driven by its blockbuster GLP-1 drugs, that it can simply power through any obstacle. We took a closer look at the stock’s momentum and valuation in a separate piece. If you believe this momentum continues unchecked, capping your upside would mean leaving a lot of money on the table.

On the other hand, there are real reasons to think the path forward gets bumpier. As one analyst noted, investors are now “acutely focused on pricing.” Management itself expects price to be a “headwind in the low to mid-teens for the full year.” And while the company is working to expand insurance coverage through programs like Lilly Employer Connect, the CEO has been candid that getting broad employer buy-in “won’t be a straight line.” If you suspect these pricing and access challenges will weigh on the stock, then getting paid a guaranteed income now to agree to sell your shares at a higher price is a strong proposition. The key thing to watch is that price headwind; if it starts to bite harder than expected, this trade will look very smart indeed.

How Much Could The Stocks You Hold Pay You?

You may not own LLY, but you almost certainly own something that could be paying you. Our Covered Call Finder lets you type in a stock, or a few, and instantly see the income a covered call could generate on each, then dial the strike up or down with a slider to balance more income against more upside. It is the quickest way to see what the names in your own portfolio could pay.

One step out from a single name: a healthcare ETF like XLV owns the whole healthcare group at once, so no single company can sink you.

Income From A Big Position Does Not Shrink The Position

Selling calls generates income from a holding you already own, which makes now the right moment to check how large that holding has actually become. 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.