While the medium-term outlook remains negative for the African Union Microfinance Bank ($1,209.85), the immediate outlook for the stock looks positive. AU microfinance bank finds immediate resistance at $1,271 and Rs 1,351. A close above Rs 1,351 will change the medium term outlook to positive. If the stock manages to break the last level, it will likely break the $1,500 mark. On the other hand, the immediate support is at Rs 1,133 and the next support is at Rs 1,080. A close below the recent level will trigger a new downward slide that could take AU Small Finance Bank towards $973.

F&O Indicators: The African Union Bank’s Microfinance Bank November futures contract, which has seen a steady build-up of open positions in the past few weeks, dropped 3.5K shares in open position on Friday along with a lower share price. The counter has been moving the range of ₹ 1,150-1,300 for some time. Options trading indicates that the stock can move in a range of $1,200-1,300. Volume is lower at AU Small Finance Bank as the counter was introduced at F&O only in March.

strategy: Traders can consider a bull buy spread on the AU Microfinance Bank. This can be built by selling the strike call for EGP 1,300 and buying the strike call for EGP 1,240 at the same time. These options closed at a premium of 34.60 and 54.40 euros, respectively.

Since the market share is 500 shares, this would cost traders 9,900, which would be the maximum loss one could incur. It will happen if the stock fails to move above Rs 1,240. However, a profit of Rs 20,100 is possible if the stock moves above Rs 1,300. A close above £1,259.80 would make the deal break even. Hold the position until expiration or take profit whichever occurs first.

Continue: He held the position for HAL and could be reviewed next week.

Note: Recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.

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