The stock of SRF (₹2,351.2) finds an immediate support at ₹2,276 and the major one at ₹2,144. A close below the latter will change the outlook negative.
On the other hand, SRF finds an immediate resistance at ₹2,405. A close above that will trigger a fresh rally on SRF that can lift it above all-time high of ₹2,636. The long-term outlook is positive. We expect the stock to move in a narrow range with a positive bias in the short term.
F&O pointers: Despite the stock moving up from ₹2,100 to ₹2,360, SRF counter has been witnessing a steady decline in open positions indicating long unwinding. However, SRF November futures closed with a premium at ₹2,356 against the spot close of ₹2,351.20, signalling the existence of long positions. Option trading indicates that the stock will move between ₹2,200 and ₹2,400.
Strategy: Consider a bull-call spread on SRF. This can be initiated by selling 2400-strike call and simultaneously buying 2340-strike call. These options closed with a premium of ₹24.55 and ₹49.90. This strategy will cost traders ₹25.35.
As the market lot is 375 shares, this will cost traders ₹9,506.25, which will be the maximum loss in this trade. This will happen if SRF stays at current levels or sees a fall. On other hand, a profit of ₹12,993.75 is possible, if SRF rises above ₹2,400.
Exit the position if the loss mounts to ₹6,800 or at a profit of ₹12,993.75
Follow up: IRCTC moved on expected lines. Traders could still consider holding the position for a target of ₹35.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading