Con­sider cal­en­dar bull call spread on Tata Mo­tors

The Hindu Business Line - - TECHNICALLY -

Though the long-term out­look re­mains neg­a­tive for Tata Mo­tors (₹151.3), in the short term, it may re­main firm.

The stock finds im­me­di­ate sup­port at ₹129 and a close be­low that could trig­ger an­other bout of sell­ing and that could drag the stock lower to ₹104.

An im­me­di­ate re­sis­tance ap­pears at ₹165 and a ma­jor one at ₹182. A close above the lat­ter will change the medium-term out­look to pos­i­tive.

F&O point­ers: De­spite the stock trad­ing volatile on Fri­day, Tata Mo­tors Fe­bru­ary fu­tures added over 5 per cent in open in­ter­ests, which in­di­cates strong buy­ing at lower lev­els.

Op­tion trad­ing in­di­cates a range of ₹140-₹180 for Tata Mo­tors.

Strat­egy: Con­sider a cal­en­dar bull call spread on Tata Mo­tors.

This can be ini­ti­ated by sell­ing the cur­rent month ₹150-call and si­mul­ta­ne­ously buy­ing the same strike call of March month series.

They closed with a premium of ₹8.75 and ₹11.35 re­spec­tively.

This would en­tail an ini­tial out­flow of ₹ 2.6 a con­tract that works out to

₹5,200, as the mar­ket lot is 2,000 shares per con­tract.

Hold the po­si­tions till ex­piry of March con­tracts as the loss could be the premium paid.

Risk-averse in­vestors can book prof­its as per their pro­file.


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