The stock of Titan Company (₹3,148.8) is ruling at a crucial level. Immediate support levels are at ₹3,045 and ₹2,902. A close below the latter will change the short-term outlook negative. On the other hand, resistance is at ₹3,275 and a close above that will trigger a fresh rally that could lift Titan to new highs. We expect the stock to remain volatile.
F&O pointers: Titan witnessed a healthy rollover of 93 per cent. Titan’s October futures is currently ruling at ₹3,168.80 against the spot price of ₹3,148.80. The higher premium signals the existence of long positions, which present a bullish signal. Option trading indicates that Titan can move in ₹3,000-3,300 range.
Strategy: Consider a long strangle on Titan, which can be initiated by simultaneously buying 3300-call and 3000-put. These options closed with a premium of ₹26.05 and ₹14.75. As the market lot is 375 stocks, this strategy will cost ₹15,300, which will be the maximum loss. Maximum loss will happen if the stock is stuck in the narrow range of ₹3,000-3,300.
On the other hand, if the stock swings wildly in either direction, the strategy will yield very good returns. A close above ₹3,340.80 or dip below ₹2,959.20 will turn the position in-the-money. We advise traders to hold the position for at least two weeks and can be reviewed later. Initial stop-loss can be placed at ₹5,800.
Follow-up: Investors can hold SBI 600-call (October) for one more week. As expected, the stock initially fell (that helped capture the entire premium of September contracts) and rose strongly on Friday.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading