The stock of Voltas (₹799) is ruling at a crucial level. The stock finds an immediate support at ₹776 and the major one at ₹744. A close below the latter will change the short-term outlook to negative. On the other hand, the stock finds its nearest resistance at ₹834 and ₹869. A close above the latter will change the mid-term outlook to positive. Voltas, on Friday, slumped sharply after weaker-than-expected Q4 results. However, we expect the stock to move in a narrow range with positive bias in the short term.

F&O pointers: Voltas witnessed a healthy roll-over of about 80 per cent in the May series. The May futures at ₹801.45 against the spot price of ₹799, is at a premium. Options trading indicates a potential trading range of ₹750 and ₹900.

Strategy: Consider long strangle on Voltas. This can be initiated by buying an 820-strike call that closed at ₹13, and a 760-strike put that closed with a premium of ₹6.50. The cost will be ₹11,700 (market lot 600 shares), which will be the maximum loss. The maximum loss will happen if the stock is stuck in a narrow range between ₹760 and ₹820. 

On the other hand, a move above ₹839.50 or below ₹740.50 will turn the position profitable.

We advise traders to enter the position at a combined premium of ₹16-23 and exit between ₹35 and ₹40. Initial stop-loss can be placed at ₹12 that can be shifted to ₹20, if the combined premium rises above ₹24.

Follow-up: Stop-loss would have triggered on Ashok Leyland put option recommendation.

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