The stock of Jubilant FoodWorks (₹497.65) remains at a crucial level. Though the long-term outlook remains negative, in the short term the stock may try to recover. It finds an immediate resistance at ₹511 and a close above that will push the stock towards ₹527. A close above the latter will change the short-term outlook bullish.
On the other hand, the stock finds an immediate support at ₹464 and the major one at ₹434. A close below the latter could trigger fresh downfall.
F&O pointers: Jubilant futures closed at ₹498.65 against the spot close of ₹497.65. The stock has been on decline while the premium also narrowed down, signalling unwinding of longs. Option trading indicates the stock move in the ₹480-600 range.
Strategy: Consider buying 500-call, which closed with a premium of ₹9.70. As the market lot is 1,250 shares, this would cost traders ₹12,125, which would be the maximum loss one can suffer.
The maximum loss will happen if the stock fails to move above ₹500 in the current series. We advise traders to enter the contract in the range of ₹7.50-12 for an initial target of ₹20. Traders willing to take risk can aim for ₹27 with trailing stop-losses at ₹15, ₹17.50, ₹20, and ₹22 as the stock rallies.
The position will turn break even on closing above ₹509.70. Traders could stay away from the strategy if the stock opens above ₹507.
Follow-up: Stop loss would have triggered in HDFC AMC 2200-call.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading