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IFCI: The IFCI stock has been moving in the Rs 47-59 range. Only a break from this range would set a clear direction for the stock. The outlook for IFCI (market lot: 4,000) appears neutral as long as it moves in that tight band.
F&O pointers: The IFCI futures witnessed unwinding of long positions on Friday along with a fall in price. This indicates profit booking, as traders are not willing to rollover their positions. The option trading also indicates neutral view. While the 55 call witnessed unwinding of position, the same strike put saw only a marginal accumulation. This indicates that traders are cautiously positive on IFCI.
Strategy: Traders can consider short straddle on IFCI by writing (selling) IFCI 55-strike call and put which closed on Friday at Rs 2.20 and Rs 1.60 respectively. Short straddles are best suited if one considers that the stock is likely to move in a narrow range.
While the maximum profit in this strategy could be the premium earned, the loss could be unlimited if IFCI moves in a single direction, either up or down. So this strategy is for traders who can stomach the risk. Besides, one has to bear high margin commitments to enter into this strategy.
With this month having more holidays, traders could benefit from faster elapsing of time as well. So it is prudent to hold on to this strategy till expiry. The maximum profit would happen only if IFCI closes around Rs 55 on expiry.
Indian Bank: While the medium-term outlook remains neutral for Indian Bank, in the immediate-term, it could see a correction. The stock has been moving in a narrow range of Rs 200-250 in the last three months.
However, the current trend appears negative and the stock could touch the immediate support level of Rs 204. A conclusive close below the support could even drag the stock towards Rs 182. Only a close above Rs 248 would change the outlook to positive. In that event, Indian Bank has the potential to reach Rs 300.
F&O pointers: The Indian Bank futures (market lot: 1,000) saw a fresh accumulation of short positions in April futures. Options are not active in Indian Bank.
Strategy: Traders can consider going short on Indian Bank futures if the stock rules below Rs 234 levels. In that event, keep the stop-loss at Rs 234 and hold for an initial target of Rs 204.
Follow-up: Last week, we had advised traders to consider going long on Punj Lloyd and Orchid Chemicals. While the former achieved the recommended target, the latter hit the stop-loss. Traders with high risk appetite can hold on to Punj Lloyd with the recommended stop-loss for the entire series.
Feedback or queries (on positions) may be sent to f&o@thehindu.co.in, blfuturesoptions@gmail.com by Sunday noon. Replies will be published on Monday.
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