🎯 Profit Taken: Bear Call Spread – LLY Expired OTM

✅ $567 net profit (100%)

The November 17 setup on Eli Lilly (LLY) delivered full premium capture as the stock finally cooled after an extreme parabolic extension into historically overbought territory. No crash was required—just the simple failure of buyers to maintain unsustainable vertical acceleration.

LLY opened the week stretched far above all moving averages, with daily RSI reading above 81—levels that even mega-cap leaders rarely sustain for long. The trade was built on statistical exhaustion, not reversal prediction. The 1100/1110 bear call spread sat comfortably above the highs, requiring an additional ~8% surge in just four trading days to threaten the structure.

That acceleration never materialized. By Friday’s expiration, momentum had softened, price stalled near ~1059, and both calls expired worthless—locking in the full premium.

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Trade Recap

Structure: Bear Call Spread
Expiration: Nov 21, 2025
Short Call: 1100C (10-delta)
Long Call: 1110C
Contracts: 13
Credit Received: $0.45 per contract
Gross Profit: $585
Broker Fees: –$18.20
Net P/L: +$567

👉 View on OptionStrat
👉 View in Trade Log

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Post-mortem

This trade captured exhaustion at extremes—fading unsustainable velocity rather than calling tops.

→ Parabolic extension met statistical limits

LLY had been in a straight-line melt-up for weeks, distancing itself dramatically from the EMA-12 and EMA-26. Moves of this magnitude at all-time highs rarely continue without cooling. The daily RSI pierced 81—an environment where mean reversion or flattening carries a strong statistical edge.

→ Momentum stalled right when it needed to accelerate

For the 1100 strike to be threatened, LLY needed another explosive push immediately after Monday’s extension. Instead, price hesitated. The vertical trajectory softened, and candles tightened—classic signs of exhaustion following a parabolic leg.

→ 10-delta placement created an 80-point buffer

The short strike at 1100 was intentionally placed far above spot (~1021 at entry). Even with Tuesday’s continuation toward ~1059, the distance remained intact. Without fresh catalysts, the probability of LLY powering through that level by Friday was extremely low.

→ No crash required—just absence of hyper-extension

This is the essence of these climactic bear call spreads:
You’re not betting on collapse.
You’re betting on the improbability of continued vertical acceleration within a narrow expiration window.

LLY delivered exactly that. Price simply failed to go vertical twice in one week. Time decay did the rest.

LLY joins the growing list of high-probability exhaustion fades where the structure relies on extremity, not prediction. This was a textbook execution of the mechanical framework: identify parabolic extension + extreme RSI + stretched distance from MAs → sell 10-delta premium far above spot → let probabilities play out.

Full premium captured. Clean, systematic, repeatable.

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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.