The long-term outlook remains positive for Axis Bank (₹616.6). The stock finds immediate support at ₹542. A close below this level will change the short-term outlook to negative. On the other hand, a conclusive close above ₹627 will trigger a fresh rally in the stock. In that event, Axis Bank could reach ₹740.
F&O pointers: Post-Budget, Axis Bank March futures witnessed a drop in open interests despite a sharp surge in price value. This indicates limited upside for the stock. Option trading also points in the same direction as Axis Bank March ₹650-call witnessed heavy accumulation of open positions, indicating that the stock could find it difficult to breach that level.
Unwinding of put options suggests limited downside too.
Strategy: Traders can consider a bear-call spread strategy on Axis Bank. This can be initiated by selling ₹590-call and simultaneously buying ₹620-call. They closed with a premium of ₹40 and ₹20.6 respectively.
This strategy will ensure an initial inflow of ₹19.4/contract. That could be the maximum profit one can earn from this strategy. For that to happen, Axis Bank has to close at or below ₹590 at the time of expiry. A maximum loss of ₹10.6/contract could happen, if Axis Bank moves past ₹620. Selling options involve margin commitments. Market lot of Axis Bank is 500 shares.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.