Derivatives

F&O strategy: Buy Info Edge ₹5,500-strike call this week

KS Badri Narayanan | Updated on July 03, 2021

The short-term trend is bullish and option trading indicates a range between ₹5,000 and ₹6,000

The long-term and short-term trend for Info Edge (India) (₹5,365.1) remains positive. The stock finds an immediate support at ₹5,152 and the next one at ₹4,928. As long as the stock stays above ₹4,155, the long-term outlook will remain positive. The immediate resistance for the stock is at ₹5,592 and if the current trend sustains, Info Edge has the potential to touch new high above ₹6,150.

F&O pointers: The counter on Friday witnessed a long build-up along with price rise. As the counter was hovering around ₹5,000, open interests also witnessed a volatile pattern. On Thursday and Friday, Info Edge July futures saw a fresh accumulation of open positions, signalling bullishness.

Strategy: Traders could consider buying ₹5,500-strike call, which closed on Friday at ₹173.30. This plain vanilla call strategy will cost traders ₹21,662.50 as the lot size is 125 shares. The maximum loss would be the premium paid. Profit potential is huge if Info Edge surges sharply in this series itself. While the break-even point is ₹5,664, any close above that will be profitable. We advise traders to exit the position if the profit hits ₹8,500 or hold the position for at least two weeks. Alternatively, traders with high risk taking capabilities can consider going long on Info Edge futures (₹5,383.7) with an initial stop loss at ₹5,233. Stop-loss can be shifted to ₹5,342 if Info Edge opens on strong note for an initial target of ₹5,485.

Follow-up: Traders are advised to book profits in Apollo Hospitals.

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

Published on July 03, 2021

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