I have shorted IRCTC 750PE and Bajaj Finance 7000PE both for December expiry. What are my chances of winning these two trades? Kindly advise – Chenchaiah Sajja

IRCTC: The stock of Indian Railway Catering and Tourism Corporation (IRCTC) ended at ₹725.9 on Monday. Note that it breached a rising trendline support a couple of weeks back. Ideally, this means that the chances for a fall are high. Nevertheless, from the current level, the stock has a strong support at ₹700, where the 200-day moving average (DMA) coincides. Similarly, ₹740 is a barrier. Therefore, the stock might be entering a consolidation phase, which could keep it within the ₹700 and ₹740 band for some time. But because you’ve sold 750-strike put, you might not benefit from the potential sideways movement since the option is in-the-money now. Therefore, we suggest you exit the 750-strike put and consider selling the 700-strike put option instead. That said, a break below ₹700 can trigger a sharp fall. Hence, you can liquidate the put short position when the stock sees a decisive fall below ₹700.

Bajaj Finance: The stock of Bajaj Finance confirmed a head-and-shoulder pattern two weeks ago and this hints at a potential fall to ₹6,300. So, the outlook is bearish. Selling puts and buying calls may not be a good idea until the stock rebounds above ₹7,000. Yet, the stock has been consolidating above the 200-DMA for the past few sessions, giving some hope. Even then, a recovery above ₹7,000 is less likely. Taking account of the 7000-strike put which you have shorted, it is currently trading at around ₹300. As the underlying is at ₹6,760, the intrinsic value of the option is now at ₹240; the time value left is around ₹40 which is not much. Thus, we suggest getting out of the trade.

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