Derivatives

As Hindalco shines, consider buying ₹400-call

KS Badri Narayanan | Updated on July 10, 2021

Option trading indicates a possible movement in the range of ₹374-450

The long-term and short-term outlook turned positive for Hindalco.

The stock finds immediate resistance at ₹398 and a conclusive close above that will trigger a fresh rally in the stock that can take it towards ₹430 initially and even to ₹465. The stock finds an immediate support at ₹376. A close below ₹362 will alter the current bullish view on the stock.

F&O pointers: Hindalco July futures closed on part with spot price of ₹391, signalling profit booking at every rise. Even the counter shed open interests on almost every alternate day, indicating traders' cautious stance. Option trading indicates a possible movement in the range of ₹374-450.

Strategy: Traders could consider 400-call on Hindalco. The option closed with a premium of ₹6.90 and as the market lot is 2,150 shares, the strategy will cost ₹14,835. The maximum loss will be the premium paid, i.e., ₹14,835 and this will happen if Hindalco fails to cross ₹400. On the other hand, profit potentials are high, if the stock surges sharply within few days. We advise traders exit the position at a profit of ₹12,500 or at a loss of ₹9,500.

Alternatively, traders could also consider buying 390-call, which closed at ₹10.85. This will cost traders ₹23,327.50. Traders could exit the position at a profit of ₹20,000 or at a loss of ₹10,000.

Follow-up: As the stock of Info Edge opened with sharp gains on Monday itself, it would not have provided any entry for traders. However, those who are holding 5,500-call can continue to hold with mentioned targets.

Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.

Published on July 10, 2021

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