F&O Strategy: Go for calendar bull call spread in Concor

K. S. Badri Narayanan | Updated on: Mar 26, 2022

We expect the bullish trend in the stock to continue

The outlook turned positive for the stock of Container Corporation of India (Concor) (₹689.8) after strong gains on Friday. If the current trend sustains, Concor can breach its all-time high of ₹754. The stock finds an immediate support at ₹592 and the major one at ₹473. Only a close below the latter will alter the current bullish view on the stock. If the current trend sustains, the next port for Concor could be ₹812. We expect the bullish trend in the stock to continue.

F&O Pointers: Concor has witnessed a healthy rollover of 26 per cent from March to April contracts. Concor April futures at ₹693.20 is also at a healthy premium over the spot price of ₹689.80 and March futures of ₹690.80. This signals rollover of long positions to next month contracts. Option trading indicates a trading range of ₹650-720.

Strategy: Traders could consider calendar bull-call spread on Concor, which can be initiated by selling the 700-strike call of current month and simultaneously buying same strike call of the next month. As these options closed with a premium of ₹14.10 and ₹36.55 respectively, the strategy would cost traders ₹17,960 (market lot: 800 shares), which would be the maximum loss one can suffer. The loss will happen if Concor gets stuck at ₹700.

On the other hand, profit potential is high if the stock closes above ₹722.45, especially if price moderates in the current series and rises sharply in the next series. Traders could exit the position at a profit of ₹18,000 or exit if the loss mounts to ₹11,500.

Alternatively, traders who can take higher risk can go long on Concor futures by keeping the stop-loss initially at ₹665 (or at ₹684 if the stock opens above ₹696) for an initial target of ₹746. If ₹754 is breached, traders can rollover the position with revised stop-loss at ₹742 for a higher target of ₹800 as well.

Follow-up: As HDFC Asset moved in opposite direction, stop-loss would have triggered for long futures strategy. However, bull-call spread can be held till expiry date i.e., March 31 as advised last week.

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

Published on March 26, 2022
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