The stock of Samvardhana Motherson International (₹67.1) is ruling at a crucial level. The short-term negative trend will get arrested if the stock manages to close above ₹71.30 and resistance at ₹75. A close above ₹75 can lift the stock towards ₹83. Samvardhana Motherson finds an immediate support at ₹63 and the major one at ₹52. We expect the stock to maintain the upward momentum in the short term.

F&O pointers: Samvardhana Motherson April futures is at ₹67.35 against the spot price of ₹67.10, signalling short covering in the counter. Option trading indicates that the stock could move in the ₹60-75 range.

Strategy: We advise traders to consider a bull-call spread on the stock. This can be done by selling ₹70-strike call and simultaneously buying ₹68-strike call.

As these options closed with a premium of ₹1.30 and ₹1.95 respectively, this would cost traders ₹4,387.50 (market lot is 6,750 shares), which will be the maximum loss one can suffer. The maximum loss will happen if the stock closes at or below ₹68 at the time of expiry.

Buying plain-vanilla call option may not work as this series has a lot of closed holidays which will erode premium due to time decay.

On the other hand, a profit of ₹9,112.50 is possible if Samvardhana Motherson rallies above ₹70. Hold the position for at least two weeks.

Follow-up:Hindustan Unilever moved on the expected lines. Traders can consider holding 2400-call with a stop loss at ₹151, which can be shifted to ₹158 and then to ₹179 for a target of ₹195.

Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading