Though the long-term outlook remains positive for the stock of Bajaj Finance (₹7,507.15), we expect the stock to face headwinds in the short term. Immediate support is at ₹7,225 and the major one is at ₹6,908. A close below the latter will change the medium-term outlook also negative. If the stock manages to stay above current level, it can hit a new peak.

F&O pointers: Bajaj Finance futures witnessed a meagre rollover of just 9 per cent to October series though the premium of over ₹36 Bajaj Finance October series signal existence of long positions. Option trading indicates that the stock could move between ₹7,000 and ₹8,000 in the short term.

Strategy: Traders could consider a diagonal calendar-put strategy which can be constructed by selling 7,500-put (₹129.40) of current series and simultaneously buying 7300-put of October expiry (₹254.15). Net cost will be ₹124.75 (₹15,593.75), which will be the maximum loss one can suffer.

On the other hand, profit potentials are huge, if the stock holds firm at current levels till the end of current expiry and falls sharply during the next month.

We advise traders to exit the current month 7500-put option if the spot price falls to ₹7,300 before expiry. But hold the long October put option for two weeks and can aim for a premium of ₹300.

Follow-up: We had advised the bull-call spread strategy on TCS last week. Traders could consider exiting September call option and hold October calls for two more weeks.

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

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