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The stock Aurobindo Pharma (₹714.5) rules at a crucial level. It finds immediate resistance at ₹759 and the next crucial one at ₹817. A close above the latter will re-confirm the long-term positive outlook. Immediate support appears at ₹675 and a close below ₹636 will trigger a fresh fall.
F&O pointers: Aurobindo Pharma futures witnessed a healthy rollover into December series. Option trading in December series indicates that the stock could test ₹900 levels.
Strategy: Traders can consider calendar bull call spread. This can be initiated by selling ₹720-call of November while simultaneously buying the same strike of December call. The options closed with a premium of ₹11.15 and ₹32.55 respectively.
To adopt the strategy, traders will have to shell out ₹17,120 or (₹21.40/contract). This will be the total loss one can suffer, if Aurobindo Pharma closes at or below ₹720. Profit potentials are huge, if the stock falls in the next four days and rises sharply in December series. Hold the position for at least three weeks.
Alternatively, traders with a high-risk appetite can consider going long on Aurobindo Pharma futures with a stop loss at ₹680, which can be shifted to ₹715, if the stock opens and stays above ₹720. Initial target could be ₹734 and ₹759 respectively.
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