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I have gone long on Coal India May futures, bought at Rs 314.70, and United Spirits June futures at Rs 2,345. Please advice stop-loss, resistance levels, and prospects. – J. Chaudhari
Coal India: The stock has been moving in the narrow band of Rs 420-280 over a long-term period. Only a break from this level will set a clear trend in the long run for Coal India. However, in the short term it is likely to move with a downward bias. It faces immediate resistance at Rs 323 and the next one at Rs 350. A close above Rs 382 will change the long-term outlook positive. It faces immediate support at Rs 293 and a conclusive close below that level will change the outlook negative for Coal India in the long-term.
F&O pointers: Rollover of open interest positions to June series is just 7 per cent. Option trading indicates a neutral view as both calls and puts witnessed unwinding of open positions.
Strategy: It is better to exit Coal India long futures. However, if you are willing to bear the risk, hold your long positions with a stop-loss at Rs 308.
United Spirits: The stock has been on a song in recent times. It is now ruling in uncharted territory. The stock finds immediate support at Rs 2,332 and only a close below Rs 1,810 will change the long-term outlook negative. As long as it sustains 2,108 it has the potential to reach Rs 2,956. However, since the stock had shot up sharply, correction could also be sharp and swift.
F&O pointers: The United Spirits June futures has witnessed a healthy rollover 32 per cent. Option trading indicates a positive bias.
Strategy: Hold your long position with a stop loss at Rs 2,332. You can also hedge your position by buying deep, out-of-the money put options such as 1,900 or 2,000 strikes. This will protect your position in case of any sharp slide in the stock.
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.
Feedback may be sent to >blfuturesoptions@gmail.com
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