IDFC (Rs 101.30): The stock is ruling at a crucial level. It finds immediate support at Rs 96 and a close below that will trigger a fresh fall in the stock. In that event, IDFC could reach Rs 75. However, in the immediate-term, the stock is expected to move in a narrow range between Rs 113 and Rs 96. A close above Rs 142 will change the medium-term outlook to positive.

F&O pointers: The IDFC futures added over two lakh shares in open interest on Friday. Rollover of open interest remains at a healthy 20 per cent. Option trading (November series) indicates a range of Rs 100-110 for IDFC stock. December options are not active for IDFC.

Strategy: Traders can consider short straddle on IDFC using 105-strike by selling both calls and puts. Short straddle is best suited when one expects the underlying stock to move in a narrow range. The options closed at Rs 3.85 and Rs 0.95 respectively. In this strategy, while the maximum profit is the premium collected, loss could be unlimited if IDFC swings wildly in one direction. Maximum profit works out to about Rs 9,500. For that to happen, IDFC should close near Rs 105. The position will start pinching investors if IDFC closes below Rs 101 or above Rs 109 at the time of expiry.

Besides, writing option involves higher margin commitments. This strategy is suggested only for traders who can withstand wild swings and who can hold it for at least two weeks.

Follow-up: We had recommended two strategies for Bank of Baroda expecting a bullish momentum. Though the stock moved as we expected, the call options did not command the expected premium. Similarly, long futures positions also turned weak after a promising start.

(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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