Time to go slow on Titan Industries

Titan Industries: The overall outlook remains positive for Titan Industries, though the stock could see a correction in the short-term.

While it finds crucial resistance at Rs 4,160, the support appears at Rs 3,575. A close below the support could weaken the stock sharply towards Rs 3,085.

Only a conclusive close above Rs 4,160 would change the outlook positive for Titan Industries. In that event Titan would chart a new peak at around Rs 4,575-4,625.

F&O pointers: Titan Industries saw a rollover of 86 per cent, which is higher than three- and six-month averages.

However, on Friday, the stock added short positions. Options are not that active to discern any view.

Strategy: Traders could consider going short on Titan Industries (market lot: 125 shares) with a stop-loss at Rs 4,160 for an initial target of Rs 3,575. If the stock behaves on expected lines, adjust the stop-loss suitably to protect profits.

Alternatively, traders could also consider writing 4,100 call that closed on Friday with a premium of Rs 139. (This option was not active on Friday and the price may vary drastically).

While the maximum profit in this strategy is the premium collected, the loss could be unlimited if Titan Industries moves in an opposite direction. Besides, writing options involve margin commitment. So this strategy is for traders inclining to take risk.

Jaiprakash Associates: The outlook remains neutral for JP Associates in the short-term. The stock could move in the Rs 82-105 range.

Only a break from this level would set a medium-term direction for JP Associates. A close above Rs 105 has the potential to lift the stock towards 125 and a drop below Rs 82, would take the stock to Rs 63.

F&O pointers: JP Associates saw a healthy rollover of 86 per cent, much higher than the three-month and six-month averages.

The counter saw a marginal accumulation of short position on Friday.

Option trading also indicates a neutral view for the stock, as both calls and puts accumulated open interest.

Strategy: Traders could construct short straddle on JP Associates using 90-strike. The 90-call closed with a premium of Rs 5.45 and the put at Rs 2.70.

The maximum profit in this strategy is the premium collected, while the loss could be unlimited if JP Associates moves wildly in any one of the direction.

This strategy is for slightly longer period. Maximum profit happens if the stock settles around Rs 90, near expiry. Writing options also involve margin commitments.

Follow-up: Last week, we had advised traders to consider short straddle on Infosys using 3,000-strike. The position ended the settlement with decent profits.

We had also advised traders to go long on Unitech for traders who can afford to take a risk. The position turned negatively though it opened the week in line with our expectations.

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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