I bought the June series 50,000-call on Page Industries for ₹150. Will the stock touch ₹49,000 or ₹50,000 by this month end? Kindly advice – TC Rajasekharan
Page Industries (₹46,165): Since early March, this stock has been in an upward trajectory. For the past three weeks, though, there has been some moderation in price as ₹48,800 acted as a barrier.
However, the chart shows that the stock has formed a considerable base at ₹45,750. The 50-day moving average lies at ₹45,600, thus making the price band of ₹45,600-45,750 a good support. In addition, Friday’s candlestick denotes a bullish pin bar.
The aforesaid factors show that the stock is likely to resume the rally and align with the broader uptrend soon. Once the upward movement starts, we can expect the scrip to appreciate to ₹49,300, a resistance. Above this, ₹50,000 is a potential barrier.
While the probability for a rally to ₹49,300 is high, whether that will happen before the end of the current expiry is uncertain. The option chain of June expiry shows that 48,000-call has the highest open interest; therefore, the broader expectation is that the stock might not surpass this level before expiration of June contracts.
That said, we can expect one leg of rally to ₹48,200 before June expiry. If such a move happens, and assuming that it occurs before the final week of expiry, the option premium of 50,000-call of June expiry can touch ₹100-110 price band.
So, we suggest holding the option contract and exit as and when the premium goes up to ₹100 and minimise the loss.
Post this, you may consider buying July expiry call options as the outlook is positive for the stock. The trend will turn bearish for the near-term only if the stock breaches the support at ₹45,600. As we move near the expiry of June contracts, the liquidity in the July series will improve. We suggest buying an at-the-money option.
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