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Saravanapriyan J
Tata Consumer Products (₹763.9)
This stock has been on a recovery since the beginning of April. It saw its latest upswing over the past week where it formed a higher high, indicating a considerable positive momentum.
As it stands, there are no signs of weakness. However, it should be noted that the price band of ₹760-780 is a supply zone and this could weigh on the stock price.
Taking this into account, it is advisable to book profits in the 750-strike call that you hold, which closed at ₹14.5 on Friday. Because, if there is a consolidation or a minor decline from the current level, the option premium might drop.
You can buy call options on this stock again after it decisively breaches the resistance at ₹780. In such a case, the stock price can rally swiftly to ₹830 — a resistance. You can consider the 800- or 820-strike call option.
United Breweries (₹1,479.5)
The stock, which had been in a downtrend since December last year, rebounded from a strong support band last week. This support has largely restricted the downside since June 2021.
Thus, at this price level, the likelihood of the stock seeing a rally is high.
Although ₹1,480 is a hurdle, we expect the stock to break out of this level. It could appreciate to ₹1,580 in the short term. So, continue to hold the 1500-strike call. Liquidate it at the prevailing price when the stock rallies and hits ₹1,580. This is a resistance level against which there might be a decline.
Fresh call buys can be made after the stock surpasses ₹1,580. Resistance above ₹1,580 can be spotted at ₹1,660.
As a risk management measure, you can roll over the call from May expiry to June series if the stock does not reach ₹1,580 in the third week of May. Thus, you can avoid some of the losses arising out of time decay.
Send your queries to derivatives@thehindu.co.in
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