Here's a Bull Spread Strategy on Aurobindo Pharma by HDFC Securities

The stock price has broken out from the downward slopping trendline

Bull Spread Strategy on Aurobindo Pharma

Buy Aurobindo Pharma Dec 900 Call at Rs 30 and simultaneously sell Dec 960 Call at Rs 10

Lot Size: 650

Cost of the strategy: Rs 20 (Rs 13,000 per strategy)

Maximum profit: Rs 26,000 if Aurobindo Pharma closes at or above 960 till 31 Dec expiry

Breakeven Point: Rs 920

Rationale:

-- Long build up was seen in Aurobindo Pharma futures where we have seen a 16 per cent rise in the Open Interest with price rising by 3%

-- Stock Price has broken out from the downward slopping trendline, adjoining the highs of December 7 and December 21 on the daily chart with higher volumes

-- RSI Oscillator is showing strength in the stock; DI is trading above minus DI while ADX is placed above 25, indicating momentum in the current uptrend

-- Pharma as a sector is showing strength on the chart

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Disclaimer: Nandish Shah is Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.