Option strategy of the day | OI additions and rise in trading volumes in Aurobindo pharma; long call suggested

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Aurobindo Pharma Ltd shares saw a significant surge in trading volumes during yesterday's trading session, accompanied by a rise in open interest, signaling a long buildup. At 10:20 am on July 24, the stock was trading at Rs 1,354.15, down by Rs 3.60 or 0.27 percent.

According to Avani Bhatt, Vice President of Derivative Research at JM Financial, "With long additions in futures and strong delivery volumes, the stock now appears poised to test its recent all-time high around Rs 1,410."

Bhatt recommends a long call option strategy to capture the momentum:

Long call strategy :
- Buy Aug 1400 CE at Rs 35
- Target: Rs 55
- Stop Loss: Rs 23

Derivative View

"Auro Pharma stock has seen a massive open interest addition of 30 percent with positive price action, indicating long additions. Trading volume is up by 55 percent and delivery volume is up by almost 100 percent," said Bhatt.

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Bhatt also notes that the stock has witnessed consolidation and base formation over the last five trading sessions, taking support near the 20-day EMA around Rs 1,305.

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