IndusInd Bank (Rs 374.6): The long-term outlook for IndusInd Bank remains positive as long as it trades above Rs 345. However, in the short-term, it is likely to move in a narrow range. It finds near-term resistance at Rs 405 and support at Rs 345. A close below the support would trigger a fresh fall in the stock. In that event, it can reach Rs 280.
F&O pointers: IndusInd Bank witnessed an accumulation of short positions on Thursday. Options are not that active. However, the cue available indicates a neutral view on IndusInd Bank as both calls and puts shed open positions.
Strategy: Consider short straddle on IndusInd Bank. This can be initiated by selling call and put of 380-strike price. While the call closed at Rs 18.40, the same strike put closed at Rs 21.95.
Short-straddle strategy is best suited when one expects narrow movement of the underlying. While this strategy entails only a limited profit to the extent of premium collected, loss could be unlimited if IndusInd swings wildly in any one of the directions, i.e., either up or down.
Maximum profit occurs if IndusInd Bank closes at Rs 380 at the time of expiry. In that event, the profit would be about Rs 20,000. Traders are advised to consider this strategy till expiry. The position will start pinching traders if IndusInd moves above Rs 420 or closes below Rs 340.
Follow-up: Last week, we advised traders to consider a long on Ranbaxy. The counter surged as expected.
(Note: Feedback or queries (on positions) may be sent to >blfuturesoptions@gmail.com by Sunday noon. Replies will be published on Monday.)
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