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March 4, 2009 12:44 EST Related Symbols: LLY
you're watching:
Mad About Options
An options-related take on Jim Cramer's latest recommendations and analysis on the latest securities and ETFs getting attention on the Street.
No Blossom for Eli Lilly
Cramer’s Comments: Stay away from LLY. Obama’s plan to have the government directly negotiate drug prices with pharmaceutical companies is bad news for firms like Lilly.
Jud’s Comments: Looks like Cramer’s bearish on LLY.
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If you AGREE with Cramer…
Strategy: Bear put spread
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| Leg | Action | Expiry | Stk | Call/Put | Strike |
|---|---|---|---|---|---|
| Leg 1 | Buy | Apr | LLY | Puts | 35 |
| Leg 2 | Sell | Apr | LLY | Puts | 27.5 |
| Premium: | $5.60 | ||||
| Break Even: | Below $29.40 at expiration | ||||
| Max Gain: | $1.90 minus commissions | ||||
| Max Loss: | $5.60 plus commissions | ||||
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If you DISAGREE with Cramer…
Strategy: Ratio Synthetic
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| Leg | Action | Expiry | Stk | Call/Put | Strike |
|---|---|---|---|---|---|
| Leg 1 | Buy | Jan | LLY | Calls | 30 |
| Leg 2 | Sell | Jan | LLY | Puts | 25 |
| Premium: | $0.80 | ||||
| Break Even: | Above $24.6 at expiration | ||||
| Max Gain: | Long 2 shares of stock above $29.6 | ||||
| Max Loss: | $49.20 plus commissions | ||||
