Why go for diagonal bull call spread on Titan this week

K. S. Badri Narayanan | Updated on: Feb 19, 2022

The stock of Titan Company (₹2,488.95) is ruling at a crucial level, though the long-term outlook remains positive. The stock has an immediate support at ₹2,350 and the next one at ₹2,225. A close below the latter will change the mid-term outlook to negative for the stock and that can weaken it towards ₹1,885. On the other hand, a close above ₹2,580 will trigger a fresh rally in Titan that can lift it towards ₹2,650.

F&O Pointers: The futures contract of Titan Company saw a healthy rollover of 11 per cent to March series. The February futures closed at ₹2486.05 and March futures at ₹2,495.55 against the spot close of ₹2,488.95, signalling long rollovers. Option trading indicates that Titan can move in a range of ₹2,400-2,600.

Strategy: We advise traders to consider a diagonal bull call spread on Titan. This can be done by selling ₹2,460-call of current month and buying ₹2,500-call of March expiry. These options closed at a premium of ₹48.95 and at ₹86.85. This strategy will cost traders ₹14,212.50 (lot size of 375 shares), which will be the maximum loss one can suffer. The maximum loss will happen if the stock closes at or below ₹2,460. On the other hand, a close above ₹2537.90 will turn the position positive.

We advise traders hold the position till the second week of next series or exit the position if the loss mounts to ₹9,500. We expect Titan to remain volatile.

Follow-up: Last week, we advised a calendar bull-call spread on Bank Nifty futures. We advise traders to hold the position.

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

Published on February 19, 2022
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