DLF:The stock is likely to move in a slightly broader range of Rs 170-230 in the short-term. A close above Rs 230 will lift the stock to Rs 272. But, a close below Rs 170 will pull the stock towards its all-time low of Rs 165. As long as DLF rules below Rs 380-390, the long-term outlook remains negative.
F&O pointers: The DLF futures witnessed a modest rollover of about 28 per cent. Option trading indicates a neutral view as both calls and puts shed open position in August series. September series did not see much activity.
Strategy: Traders could consider bear call spread strategy on DLF using August series. This can be constructed by selling 190 call and buying 200 call, which closed at Rs 18.5 and Rs 8.9 respectively.
The bear call spread strategy can be adopted when the trader feels the stock is either range bound or falling. In this strategy, the trader receives a net credit (Rs 9.6) because the call he/she buys is of a higher strike price than the call sold.
If the stock falls, both calls will expire worthless and the investor can retain the net credit (Rs 9.6), which is the maximum profit. The maximum loss is the difference in strikes less the net credit received, which is 40 paisa.
MTNL: The short-term outlook turned positive for MTNL. If the current rally sustains, the stock could go up to Rs 46 and even to Rs 56, where it finds major resistance. The stock finds immediate support at Rs 34. However, the long-term outlook remains negative for MTNL as long as it stays below Rs 155.
F&O pointers: Despite sharp gains, the MTNL futures witnessed unwinding of long positions both in August as well as September series. It witnessed a rollover of 19 per cent, which is same as three month average. Options in August series indicate unwinding of open interest. September options were not active. However, a little cue available in September options point to a positive bias, as 40 and 35 calls shed open interest.
Strategy: Consider going long on MTNL futures with a stop-loss at Rs 38. Traders who can bear risk can keep the stop-loss even at Rs 34.5 for a target of Rs 56. Stop-loss can be shifted to Rs 46, if the stock moves past that level.
(Note: Feedback or queries (on positions) may be sent to blfuturesoptions@gmail.com by Sunday noon. Replies will be published on Monday.)
Keywords: bear call spread strategy, DLF, MTNL futures, stock recommendation,
Comments:
First of all thanks to BL for bringing Stock/Market strategy in sunday edition. I have been working on the derivatives over past five years and honestly never made any money except loosing the money. Then i quit from the derivatives.
Even though i have been reading BL ( sunday) right from its inception, i never followed market strategy. Recently i simply followed the direction given in BL since i know lots of research might have gone there. Fisrt for a period of one month i played in virtual mode without investing and later invested. I am happy to share with you that i made lots of money ( last three months). More than money i am confident in dealing with derivatives as well as technically sound. I owe this to BL reserach bureau.
Now i have a query. You talk about stradle/long call /bear call spread. I find bear call spread is less risky since i know the gain/loss(maximum). Similarly is there any 'bull put spread' if i know the stock willl sure go up instead of going on 'long' in f
This is G.Raghuraman from Bangalore, well and wish to hear the same from u.. I am the regular B.L Subscriber for more than 5 years. This is regarding your Stock Strategy on 26th Aug. about DLF bear call spread, its really very useful and trade able too. since the lose is very minimum and the profit is good. My request is kindly help me to identify such calls, it will be useful for me. Sir, if possible kindly live your contact no. Expecting your reply eagerly.
Thanking u....
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