Bear Put Spread – LLY
📉 High-velocity extension meets early exhaustion signals. Opened December 1.
Today I stepped into a setup that sits outside my usual playbook for this portfolio. Most of my trades are built around reversal patterns expressed through Bear Call Credit Spreads with weekly expirations. But this morning, with the broader market leaning red and none of my 50-stock watchlist offering a clean 10-delta call spread into Friday’s expiration, Eli Lilly (LLY) presented a different kind of opportunity.
LLY has been on a near-vertical run throughout November, pushing into fresh all-time highs and stretching far above its key moving averages. The daily chart is now showing early signs of exhaustion: RSI remains elevated near extreme territory, price is extended beyond its upper Donchian boundary, and momentum on the MACD histogram has begun to taper. While the trend is still objectively strong, the conditions favor a controlled pullback rather than uninterrupted continuation.
To express this view with defined risk, I entered a Bear Put Debit Spread with January 16, 2026 expiration, sized at 1 contract:
Buy PUT 1080
Sell PUT 1060
Entry date: December 1
Net debit: corresponds to the trade log below
Maximum potential profit at expiration: ~$1,050
This structure allows me to participate in a potential downside fade in LLY’s overextended move, without relying on a weekly setup that wasn’t available today.
👉 View on OptionStrat
👉 View in Trade Log
❤️ Support the Project
This Substack is free to read.
If you find value in the posts and want to support consistency,
you can do so 👉 by donating here 👈
Thanks for reading. Let’s build better trades.
Disclaimer
All content is for informational purposes only and does not constitute financial advice.Any trades or strategies should be tested in a simulated environment before use.Trading involves risk, and all decisions are the sole responsibility of the reader.