The stock of Ashok Leyland (₹136.25) finds a major support at ₹134.5. A close below this level will change the short-term outlook negative. Subsequent supports are at ₹122 and ₹104. A close below the latter will change even the mid-term outlook to negative.

On the other hand, it finds resistance at ₹146. A close above ₹160 can trigger a fresh rally. We expect Ashok Leyland to witness a negative bias in the short term.

F&O pointers: Ashok Leyland contracts saw a healthy rollover of nearly 18 per cent. The May futures closed at ₹137.35 and April futures at ₹136.60 against the spot price of ₹136.25. It indicates rollover of long positions. Option trading indicates a range of ₹135 to ₹150.

Strategy: Consider buying a plain-vanilla May 135-strike put option. The option closed with a premium of ₹3.05. As the market lot is 5,000 shares, this would cost traders ₹15,250, which would be the maximum loss. On the other hand, profit potentials are high, if the stock falls swiftly in the next couple of weeks.

Also read: F&O Tracker: Nifty 50, Nifty Bank likely to remain range bound

Generally, the company announces result during the second or third week of May. So, the stock tends to remain volatile during and just ahead of the result announcement.

We advise traders to enter the option between ₹2.5 and ₹3.5 for a target of ₹7-8. Initial stop-loss can be placed at ₹1.85. Shift it to ₹2.5 if the option price rises to ₹3.75 and ₹3.5 on a close above ₹5.

Follow-up: Recommendation on Divi’s Lab hit the target.

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

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