Comments
The stock of Hindustan Aeronautics Ltd (HAL) (₹2,479.1) finds an immediate support at ₹2,355 and a resistance at ₹2,542. Though the long-term outlook remains positive (as long as it remains above ₹1,892), we expect the stock to trade in the narrow range of ₹2,300-2,600 in the short term. Any break from this band will trigger a sharp movement in that direction. The company came out with strong Q2 results last week.
F&O pointers: HAL November futures (₹2,474.65) closed at a discount to the spot price of ₹2.479.1. Despite a sharp gain on Friday, HAL December futures witnessed long winding. Option trading indicates a movement in the ₹2,400-2,900 range, where respective puts and calls saw higher concentration of open positions.
Strategy: We advise traders to consider short strangle on HAL that can be initiated by selling 2250-put (₹8.65) and 2750-call (₹8.70). The inflow will be ₹8,217.50, which will be the maximum profit. This can be realised if the stock expires ₹2,250 and ₹2,750. Note that this involves higher risk as it involves option selling.
A close above ₹2,767.35 or below ₹2,322.65 will start hurting the position. Traders should constantly monitor the price movement and act deftly due to the risks involved. Also remember that this strategy requires high margins.
Follow-up: We advise traders to hold on to the IRCTC (bull-call spread) strategy for one more week and re-evaluate later.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.