The long-term outlook remains positive for Aurobindo Pharma, as long as it remains above ₹1,281.
If the current bullish momentum sustains, the stock could touch ₹1,620 in the short term. However, it is a high-beta stock, which means that it can swing wildly. Immediate resistance appears at ₹1,449 and a conclusive close above this level can take the stock higher to cross the psychological ₹1,500-mark.
F&O pointers: The Aurobindo Pharma July futures shed open interest on Friday, due to huge volatility. The July futures command a premium of ₹8 over the spot price, indicating good number of long positions. Option trading indicates that the stock could move in the range of ₹1,400-1,500.
Strategy: Traders can consider writing Aurobindo Pharma, where the maximum profit will be the premium received. This strategy is for traders who can withstand risk and high volatility. Traders can sell 1,350-put, which ended at ₹26.25 on Friday. This will ensure an inflow of about ₹6,560, which will be the maximum profit.
For that to happen, the stock has to trade above ₹1,350 at the time of closing. However, the loss could be unlimited if the stock closes below ₹1,323.
Traders can exit the position, if the loss mounts to ₹4,500. Risk-averse traders can even consider writing the ₹1,300 put that ended at ₹15. Here the maximum profit could be ₹3,750.
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