Buy Alert: February 6, 2013

Marcus Haber | February 6, 2013

Buy Alert: February 6, 2013

Trade Details

Buy Eli Lilly (LLY) March 2013 $52.50 Puts for $0.85 or better

Why?

LLY has been on a nice run after posting strong earnings results at the end of January. However, I believe the climb has run its course.

From a technical perspective, LLY has hit a double top, and is finding strong resistance around $54 per share. Plus, the stock is now trading above its 20-day and 50-day moving average. Historically, LLY has traded back to the 50-day level once crossing the 20-day line.

This setup looks likely to occur any day now. Once the stock drops below the 20-day, it could easily head down to the 50-day average, around $51 per share.

Let’s buy March puts on LLY.