I’m holding one lot of May expiry 430-call on ITC bought for ₹11.60. My target price is ₹18. How long should I hold the position and whether the target is justifiable or not? – Anish Das

ITC (₹430.25): The stock has seen a good rise in price over the past month. While there has been some moderation in the recent sessions, the scrip remains above a support at ₹425.

We expect the stock to resume the uptrend soon. It shows potential for a rally to ₹450, a resistance. If this appreciation happens within a couple of weeks, the premium of 430-call option can go up to approximately ₹22. Therefore, the target that you have set is reasonable.

But note that if the stock slips below the support at ₹425, the near-term outlook can turn weak. In this scenario, the price can decline to ₹410 and ₹400, notable support levels. Such a fall can considerably erode the option premium. So, when the stock price falls below ₹425, liquidate the option at the prevailing price.

I went long on Sona BLW 500-strike call at ₹18. Is the outlook bullish for the stock? Where should I exit this trade if the stock goes up? – Syed Rashmi

Sona BLW (₹496.95): The stock of Sona BLW Precision Forgings broke out of a trendline resistance at ₹480 last week. At this price point the 50-day moving average coincides. Thus, the recent breakout is significant, and yes, the outlook is positive at the moment.

The nearest resistance can be spotted at ₹520. A breach of this can intensify the rally where the stock can rise quickly to ₹600.

On the other hand, if the stock declines from the current level, it can find support at ₹480. But a break below this level can turn the outlook weak. Support below ₹480 can be seen at ₹450.

Yet, as there is a resistance at ₹520, you may consider exiting the option when the stock hits this level. A rally to this point can lift the premium of 500-call to ₹30-35 range. So, you can liquidate your trade when the option price hits ₹30.

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Published on May 3, 2025