Titan Industries (Rs 218): The long-term outlook remains positive for Titan Industries, as long as it stays above Rs 160. However, in the short-term it faces some pressure. Currently, the stock is ruling at crucial level. A close below Rs 215 will weaken it to Rs 180. If it sustains at current levels, the stock could reach Rs 254.

F&O pointers: The Titan futures added fresh short positions on Friday. Options are not that active. However, available cues indicates a negative bias.

Strategy: Traders can short Titan Industries futures with a stop-loss at Rs 225 (spot price on a closing day basis). Stop-loss can be shifted to Rs 215, if it dips below that level. Traders could aim for a target of Rs 180.

Traders willing to take a risk can also write 220 call on Titan that closed at Rs 5.2 on Friday. While the maximum profit in this strategy is the premium collected, loss will escalate if Titan surges sharply. Traders will get a pinch, if Titan settles above Rs 225. Market lot is 1,000 units/contract.

JP Associates (Rs 75): The long-term outlook remains negative for JP Associates as long as it stays below Rs 125. The stock finds crucial resistance at Rs 85. In the near-term, JP Associates is likely to move in a broader range of Rs 55 and Rs 85. In the short term, we expect it to move in Rs 70-80 range.

F&O pointers: The JP Associates futures added fresh shorts on Friday. Option trading indicates negative bias as puts witnessed unwinding of open position.

Strategy: Consider short strangle on JP Associates using 70 put and 80 call that have closed at Rs 0.70 and Re 1 respectively. The market lot is 4,000 units/contract.

As the maximum profit is the premium collected, we advise traders with high risk quotient to consider this strategy. Besides, the loss could be unlimited if JP Associates closes below Rs 68.25 or above Rs 81.75. Maximum profit will occur if JP Associates settles between the strike prices at the time of expiry.

Follow-up: Last week, we advised short-strangles on HDIL (using 75 put and 90 call) and Reliance Capital (using 320 put and 360 call). Both the positions remain in positive. Traders can continue to hold to gain the maximum.

Last week, we inadvertently mentioned the maximum profit as Rs 26,000 in Reliance Capital strategy whereas the maximum profit would only be Rs 6,500.

Note: Feedback or queries (on positions) may be sent to blfuturesoptions@gmail.com by Sunday noon. Replies will be published on Monday.

(This article was published on August 11, 2012)
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