The stock of Godrej Properties (₹1,603.25) is ruling at a crucial level. While the long-term outlook will remain positive as long as the stock rules above ₹1,221, in the short-term the stock may see downward pressure. Godrej Properties finds an immediate support at ₹1,547 and a crucial one at ₹1,440. On the other hand, immediate resistance for the stock appears at ₹1,780 and a close above this can change the short-term outlook too positive. A close above ₹2,000 can trigger a fresh rally that lift the stock to new heights.
F&O pointers: Godrej Properties futures closed at ₹1,604.50, a tad above the spot close of ₹1,603.25. From a high of ₹1,706 in April, the counter has been on a downward slope along with unwinding of open positions. This signals that traders are not willing to carry over the position. Option trading indicates a range of ₹1,500-1,700 for the scrip.
Strategy: We suggest traders to consider buying a plain vanilla 1550-put option on Godrej Properties which closed with a premium of ₹29.10. As the market lot is 325 shares per lot, this strategy would cost traders ₹9 457.50, which will be the maximum loss one can suffer if the stock stays at or above ₹1,550 on expiry.
On the other hand, profit potential is high if Godrej Properties slides sharply, that too in the next few days. A close below ₹1,520.90 on expiry will turn the position positive. Traders can exit the position at a profit of ₹12,500 or exit if loss rises to ₹6,500. Holding the position till close to expiry will enhance the profit potential.
Follow-up: Traders could exit the short call option (800-strike) on Cholamandalam and hold the long call (740-strike).
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.