The stock of Godrej Properties (₹1,123.35), in the short term, may see higher volatility before taking a clear direction. It finds an immediate support at ₹1,053 and at ₹960. A close below ₹960 will change the outlook negative that can take the stock to ₹693. On the other hand, immediate resistance appears at ₹1,174. Only a close above ₹1,258 will change the short-term outlook positive.
F&O pointers: Godrej Properties futures closed at ₹1,127.85 against the spot price of ₹1,123.35. The premium suggests the existence of long positions. Option trading indicates a range of ₹1,100-1,300 for the stock.
Strategy: Consider buying a plain vanilla 1120-call option on Godrej Properties which closed with a premium of ₹27.55. As the market lot is 425 shares, this strategy would cost traders ₹11,708.75 – the maximum loss one can suffer in this trade.
On the other hand, profit potential is high, if Godrej Properties surges sharply in the next few days. The breakeven price for this trade is ₹1,147.55. Traders can exit the position if the profit rises to ₹9,500 or exit if the loss mounts to ₹6,500. Holding the position till close to expiry will enhance the profit potential.
Follow-up: Traders could exit the short call option (2400-strike March) on Reliance Industries and hold the long call (2400-strike April). Even though you will be facing unrealised loss now, there are possibilities for a recovery from here which could turn the option in-the-money. So, hold the April month contracts as mentioned last week.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading