Reliance Communications closed at Rs 135 with good built-up of open interest in 135 put and a little shedding in 145 call. Can I buy 145 call at Rs 4.35? — Kishore Lekhwani

Of late, the stock has been showing strong resilience. It now finds resistance at Rs 145 and the next one at Rs 166. However, the long-term outlook remains negative for Reliance Communications as long as it stays below Rs 293. The stock finds an immediate support at Rs 111 and the next one at Rs 96.

As long as it holds above Rs 83, the medium-term outlook remains positive.

F&O pointers: As you said, the counter witnessed heavy built-up in open interest positions

. It added over 16 lakh shares in open interest on Friday. Unwinding of open interests is seen in call options, though 140-strike added close to 2.5 lakh shares.

Similarly, 135 put strike accumulated 3.4 lakh shares.

F&O trading suggests Reliance Communications may struggle to move past Rs 140 though strong support appears at 135 and 130 levels.

Strategy: It is always better to buy options that are at-the-money (ATM) or near ATM.

I would suggest you to buy 137.5 or 140 call for better return.

NOTE: The analysis and opinion expressed in this column are based on F&O data available at this point of time and on technical analysis based on past price movements. There is risk of loss in trading.

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(This article was published on July 7, 2013)
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