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The Hint Of Inflation and Eli Lilly

It's Thursday morning and the markets are yet to open. Everything is soon to cost more but not yet. It's the "not-yet-markets' option traders find themselves trading in. Walmart is proudly advertising grapes are on sale. They want your business. We all have to go on living and we all have fears of getting hit by Donald Trump's hammer. Are car prices going to cost more? Who now has extra money to go to Disneyland? Should we be stocking up on plastic flower pots and party supplies from Dollarama? The markets sold off yesterday and tomorrow the markets will be closed for "Good Friday". In the futures market this morning at 8:17 a.m. the DJIA is down 588 points while the Nasdaq is up 172 points. Perhaps there will be a reprieve on the tech stocks today. The little fish like us trying to play options in this environment have lost our appetite to trade. Throw in $500.00 dollars and it's lost in a couple of days. Eli Lilly is expected to open like $80.00 higher and here is how the Call options on it closed yesterday. Who would have the guts to be playing their last day options which expire today?
These are the "at-money" Call options and there are no bids and no asks. That will not happen until the markets open. All it tells us is what this series of options closed at on the previous day. Can you see in the small print below the $822.50-$883.00 premarket "bid and ask"? Yes the stock in the premarket is now trading $87.60 higher! (anyone can trade in the premarket).
The April 25th $735.00 Calls closed at $9.40. The "open interest" in these Call options is very low meaning no one was tipped of that this action was about to happen. That in itself is amazing. The company did however take a risk in releasing this news on the very day an option series expires. That is when the premiums on their one day options do not have much of a time value premium built into them. Now an early morning look at the $730.00 Call options three minutes into the morning trading action. What an increase in price!.
The stock is on fire. Here is how the stock closed out the day.
Look at how well these various series of Calls options did.
The option series with the higher striking prices increased in value more. Trading like this is unpredictable. Going forward expect to see higher time value premiums built into both Eli Lilly's Calls and Puts.

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