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The long-term outlook remains positive for the Biocon stock (₹476.7). It finds a crucial resistance at ₹512, a close above which could trigger a fresh rally. The stock finds immediate support at ₹444 and the next crucial one at ₹402. A close below this level can negate the current bullish trend.
F&O pointers: The Biocon July futures added 1.65 lakh shares on Friday, most of which are on the long side. Option trading indicates resistance at ₹500 for the stock.
Strategy: Traders can consider a short strangle strategy on Biocon. This can be initiated by selling 500 call and 450 put. They closed with a premium of ₹4.45 and ₹2.7 respectively. This strategy will ensure an initial inflow of ₹3,575. This will be the maximum profit one can earn under the strategy. For that to happen, Biocon has to settle between ₹450 and ₹500 at the time of expiry.
However, the loss in this strategy is unlimited. A close above ₹507 or below ₹443 will start affecting the traders. Consider exiting from the position if the loss mounts to ₹2,000.
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