Weekly Strategy, February Week 3 | Stocks and Commodities

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February 16, 2014
Time: 1.45 pm

Weekly Strategy: Sell Auro Pharma 450 Put option and 550 Call option.

1. Auro Pharma has the highest open interest among the F&O stocks.
2. It is finding strong support at 480.
3. Twice it went to 480 and bounced back.
4. So in the short term we can say 480 is the double bottom.
5. Only on the result day, Auro Pharma opened at 538 and on the same day it fell below 520.
6. There is a huge selling pressure beyond 520.
7. Since there are no important events and there are only 8 more trading sessions, markets are expected to be sideways mode.
8. So Auro Pharma is likey to trade between 480 and 520 until expiry.
9. Since it is a highly volatile stock, it may break the range.
10. Even if the range is broken, still it is expected to trade between 450 and 550.
11. Auro Pharma 450 Put option is closed at Rs 3.15.
12. Auro Pharma 550 Call option is closed at Rs 2.40 on Friday.
13. Total premium is around Rs 11000 which is the maximum profit for initial span margin of around Rs 150000.
14. This works out to be more than 7% return just for 8 trading sessions.
15. Considering the wide range, low risk, this is an excellent return.