Ranbaxy Laboratories (₹497.1): It appears Ranbaxy is all set for a major uptrend, provided if it manages to cross a major hurdle at ₹540. In that case, the stock could cross it’s all-time of ₹625, registered five years ago. If it manages to surpass the key resistance, Ranbaxy could touch ₹720-730, according to Fibanocci projections. Immediate resistance and support are placed at ₹520 and ₹473 correspondingly. It finds major support at ₹377.

F&O pointers: The Ranbaxy July futures witnessed unwinding of over one lakh shares on Friday despite the stock scoring handsome gains. This indicates that traders booked profits due the volatile nature of the stock. Option trading indicates a trading range between ₹460-520 for the stock.

Strategy: The best strategy is go long on Ranbaxy. Traders could keep a stop-loss at ₹473, for an initial target of ₹540. If Ranbaxy opens on positive note and closes above ₹500, the stop-loss can be shifted to ₹495. Stop-loss mentioned are for the spot price and on a closing day basis. For traders who wish to take higher risk can even consider rolling over their positions beyond ₹540 for a target of ₹720, with a trailing stop-loss. As the past trading pattern indicates, the stock generally succumbs to volatility. So traders, who can withstand volatile trading conditions could consider this strategy.

Else, traders could consider buying ₹520-call, which closed at ₹11.50. The maximum loss is the premium paid while the profit is unlimited. Traders could exit the position if the premium hits ₹20 or ₹6.

Follow-up: Last week, we had suggested calendar spread on United Spirits. Traders could consider holding the ₹2700-call on USL till expiry.

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