I bought United Spirits 1600-put option (Jan expiry) for ₹29. I’m in profit now. Will the share price fall further? Shall I hold or exit at current price? -  Nelson

United Spirits (₹1,540):  The stock, which has been in a long-term uptrend, has seen a sharp fall in price in recent sessions. Although it is a counter-trend trade, you have timed it well and capitalised on the fall by buying a put option.

That said, from the current level, the stock of United Spirits has a key support at ₹1,525. The 50-day moving average and a trendline coincide at this price level, making it a strong base. Also, as mentioned above, the broader trend is bullish. So, the support at ₹1,525 could trigger an upmove.

Considering the above factors, we suggest exiting the 1600-put option with a profit, whose premium is currently at ₹65. You may consider buying puts again if the base at ₹1,525 is breached.

Send your queries to derivatives@thehindu.co.in

Published on January 10, 2025