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The outlook remains bullish for Aurobindo Pharma. The stock finds immediate support at ₹705 and the next crucial one at ₹678.
F&O pointers: The counter shed open interest on Friday. Option trading indicates a range of ₹700-740 for the stock.
Strategy: Traders can consider a bull-spread strategy on Aurobindo Pharma. This can be initiated by buying ₹740 call and selling ₹760. This will entail an initial outgo of ₹3,225, as the options closed at ₹19.95 and ₹13.5 respectively.
Both profit and loss are limited in this strategy. The loss is limited to the initial outgo (₹3,225), which will occur if Aurobindo Pharma closes below ₹740. On the other hand, maximum gain will be at ₹6,775.
For that to happen, the stock has to close at ₹760 or above.
We advise traders to hold the position for at least two weeks.
Follow-up: Last week, we advised traders to consider short-strangle on HDIL. The position is in-the-money, as the stock moved on expected lines. Traders can hold their position as advised.
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