The Hindu Business Line : Stocks Strategy: Consider short straddle in Tata Teleservices

Tata Teleservices Maharashtra (Rs 25.9): The stock has been in a downtrend for quite sometime. It faces a strong resistance at Rs 33 and so as long as it stays below that level, the weak trend is likely to persist. However, it is now critically placed close to the support level of Rs 25. A dip below this (on a closing day basis) could weaken it further to Rs19-18 level. We feel that the stock could see a sideways movement around Rs 26-27 level.

Signals from the derivative segment were however mixed. The stock saw a rollover of 19 per cent and the December futures finished at Rs 26.05 premium with respect to the current month series. Besides, calls for strikes Rs 27.5 and 30 witnessed higher accumulation indicating that the counter may have limited upside potential. Puts (at strikes 25 and 30) also saw moderate accumulation.

Consider a short straddle on TTML (market lot 10,450). This can be initiated by selling 27.5 call and put, which ended at Rs 0.30 and Rs 1.45 respectively. This strategy is valid only for a maximum of two days.

Patni Computer (Rs 444.4): This stock is also in a downtrend. The immediate resistance and support levels appear at Rs 510 and Rs 415. A dip below 415 could take it to Rs 390. If Patni Computer manages to reverse the direction and move above 510 (on a closing day basis), then it can go up to 555.

F&O pointers

This stock saw a low rollover of 15 per cent. Futures are ruling in premium with respect to spot price. Options, however, were not active in the counter.

Traders can consider going short on Patni Computer futures, if it opens on a weak note. Keep the stop loss at Monday’s high level, at the time of entering the contract. Market lot is 1300 shares per contract.

Follow up

Last week, we had advised traders to go short in JP Associates and Tech Mahindra. Even though the stop losses would have been triggered last week, high-risk traders can retain the positions, as we will feel that the strategy can still achieve its targeted levels. In fact, Tech Mahindra is close to our targeted zone.

Feedback or queries (on positions) may be sent to f& o@thehindu.co.in. Replies will be published in the Monday edition.

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