Consider a calendar bull-call strategy on M&M

KS Badri Narayanan | Updated on October 29, 2019

M&M office. file photo   -  REUTERS

The long-term outlook will remain bearish for Mahindra & Mahindra, as long as the stock rules below ₹724. However, the short-term trend has turned positive for the stock. The stock finds an immediate support at ₹543 and the major one at ₹519. Likewise, the stock finds an immediate resistance at ₹615 and the next one at ₹688.

F&O pointers

The M&M October contract has been shedding open interests throughout the month though the underlying stock has gained sharply from a low of ₹539.75 to a high of ₹602.80. This signals that the recent rally was mainly on account of short covering. Option trading indicates a range of ₹550 to ₹600 for the stock.

Event: The board of M&M will meet on November 8 to consider the quarterly results for July-September period.


Traders could consider a calendar bull-call spread on M&M. This can be initiated by selling the October ₹600-call (₹5.15) and simultaneously buying the November ₹600-call (₹20.50). That means traders need to shell out ₹15,350 for the strategy, as the market lot is 1,000 shares.

The maximum loss could be the initial payment and that will happen if M&M fails to sustain above ₹615.35. Profit potentials are huge, if M&M falls initially (during this month) and starts rising during the next series.

We advice traders to consider exiting the position at a profit of ₹10,000 or at a loss of ₹6,500. Hold the position, for at least two weeks.

Follow-up: Traders can book profits on Ashok Leyland.

Published on October 29, 2019

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like