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Tata Motors DVR (₹227), which witnessed a bear assault, managed to hold onto its major support level. The stock now rules at a very crucial level. The bear grip will loosen only if the stock manages to rally above ₹240. A conclusive close below ₹205 can drag it down to ₹165.
F&O pointers: Tata Motors DVR added fresh long positions on Friday. The counter saw accumulation of over 6.88 lakh shares with sharp rise in underlying price. This indicates a positive bias. Trading in options indicates that the stock may see resistance at ₹260.
Strategy: Traders can consider a short strangle on Tata Motors DVR. This can be initiated by simultaneously selling ₹200-put and ₹250-call. These options closed with a premium of ₹1.90 and ₹1.60 respectively. This strategy is for traders who can withstand the market volatility, as the profit is limited to the premium received, which works out to ₹7,350 (market lot is 2,100 shares per contract). But, the loss could be unlimited if the stock moves in one direction. The position will start pinching the traders if Tata Motors DVR moves above ₹253.5 or below ₹196.5. Exit if the loss mounts to ₹4,000.
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