- we are looking at a weekly chart of Aurobindo Pharma
- the stock tried it's luck to trade above the red line back in August 2020, but it could sustain on a weekly closing basis
- in the current set up, the stock is sustaining above the red line on a weekly closing basis
- the stock has closed near the high of 967 made in August 2020
- this stock needs to be watched closely
Any stock moving into unchartered territory after multi-year breakout can be strong candidate and we could be looking for targets of 1166/ 1204/ 1320 to begin with...
- sustaining above the red line for another week or may be two, could increase the probability of scaling newer highs drastically
- any dips towards the blue line / red line makes an interesting case for Longer term horizon
One may consider a Bull Put Spread strategy
Consider selling 880 Put option and buying 840 Put option
The strategy has a 10% ROI potential till 28 January 2021
The strategy has 3 important aspects,
- if the stock continues to rise, I would not lose on to the opportunity.
- If the stock falls moderately, I anyways intend to and am comfortable to buy at Mera wala Price in Equity around 905 -880 levels and
- 3rd point: if it manages to close above 880 on 28 January 2021, I still stand to gain 10% from the strategy as well as Buy the stock at Mera wala Price in Equity.
So no matter whether the
- stock price rise or
- stays where it is or
- falls down
I am in a happy state of mind in all 3 situations... 😊
Sounds Interesting...Curious... Is it really possible...
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- The view expressed here is my personal view
- Past performance is not a guarantee for future predictions
- Use this for educational purpose
- Any decision you take, you need to take responsibility for the same
- It's your hard earned money. Treat it wisely
- Trade / Invest keeping in mind your trading style, goals and objectives, time horizon & risk tolerance
- if trading in F&O, understand that F&O trading involves risk
- Do take proper risk management measures
- Do your own analysis and consult your financial adviser if need be
880 Put Option CMP 12.75
840 Put CMP 6.1
Trade is active
We have explained our view and strategy well above...
When Aurobindo was at 965 odd levels we suggested need to survive above the red line for another week or 2....
2 weeks down the line, We get that retest of red line (low is exactly exactly at 880 - we were comfortable buying in the range of 905-880 in Cash market) and by closing at 923 it did survive the 2 week test...
Come Monday morning... broader market is down and voila... this stock jumps 8%
Were we lucky???
You can say so... it doesn't matter... the fact is same... you do your home work and chances are you might start feeling lucky more often than not...
The explanation and plan has been given well in advance....
Those who followed are rewarded handsomely.... both in the Options strategy and in Cash market too....😊
If you want to improve your chances of winning trades...
- focus on Learning,
- focus on planning,
- focus on identifying entry and exit levels before you enter your trade
There is no short cut to success...
Happy learning and happy investing...!!!