The long-term outlook for the Glenmark Pharmaceuticals (Rs 337.30) stock will remain negative as long as it trades below ₹681. In the short-term, the stock may try to bounce back. It finds immediate support at ₹317 and a crucial one at ₹280. A close below the latter could trigger another bout of selling that could drag Glenmark Pharma below the ₹250 level.

On the other hand, Glenmark finds an immediate resistance at ₹361 and a close above this level has the potential to lift the stock to ₹426.

F&O Pointers

The Glenmark Pharma December futures shed its open positions on Friday, along with a fall in the share price. This signals traders’ lack of confidence in the stock, as they unwind their positions. Options trading indicates a range of ₹320-400 for the stock.

Strategy

Traders could consider a bull-call spread on Glenmark, as we expect a bounce back from the current level. This strategy can be initiated by selling the ₹350-call option, while simultaneously buying the ₹340-call. These options closed with a premium of ₹14.05 and ₹18.20 respectively. That means traders need to incur an initial cost of ₹4.15/contract or ₹4,150 (as the market lot is 1,000 shares).

Maximum loss is the premium paid (₹4,150) if the stock slips and closes below ₹340 at the time of expiry or settlement. On the other hand, a maximum profit of ₹5,850 is possible if Glenmark closes above ₹350. We advise traders to hold the position for at least three weeks.

Traders with a high-risk appetite could consider going long on Glenmark Pharma, with a stop-loss at ₹317 initially. And if the stock opens on a positive note on Monday and stays above ₹346, shift the stop loss to ₹338. With a trailing stop loss, traders could aim for a target of ₹361.

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