Market Strategy

Consider shorting Idea Cellular futures

K.S. Badri Narayanan | Updated on April 13, 2013


Idea Cellular (Rs 110.65): Though the long-term outlook for Idea Cellular remains positive as long as it stays above Rs 74.5, the stock might come under pressure to touch its crucial supports in the near-term. The stock finds immediate support at Rs 104 and the next at Rs 86. A close below Rs 97.5 will trigger a fresh slide in the stock. The stock could decline to Rs 75 then. It has key resistance at Rs 117.

F&O pointers: The counter witnessed unwinding of open interest on Friday along with fall in share price. The Idea Cellular April futures shed 2.68 lakh shares in open interest on Friday. Options are not that active. A little cue available indicates that Rs 100 could be crucial level for the stock.

Strategy: Traders could consider going short on Idea Cellular futures with Rs 115 as stop-loss, which can be shifted to Rs 109, if the stock closes below that level. Alternatively traders could also consider buying Rs 110 put which closed at Rs 2.75. While the maximum loss in this strategy is the premium paid, profits could be unlimited if Idea slips sharply.

Follow-up: We had advised short strangle on Infosys. The position would have been at loss, as the stock slumped 21 per cent on Friday. We, however, advice traders to hold on to the strategy till expiry.

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Published on April 13, 2013

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