Comments
The long-term outlook for Hindustan Petroleum Corporation Ltd (₹768.75) will remain positive as long as the stock rules above ₹637. In the short term, HPCL may witness selling pressure. Immediate support is at ₹723 and resistance is at ₹817. A close above ₹849 will trigger a fresh rally that could take HPCL to new highs above ₹1,000. However, a close below ₹723 could drag the stock towards ₹678.
F&O pointers: HPCL October futures, which added 1.81 lakh shares on Friday, closed with a premium at ₹772.9 . This indicates healthy presence of long contracts. Option trading indicates that the stock could move in the ₹760-800 range.
Strategy: We advice traders to consider a bear-put strategy. This is best suited for those expecting the stock price to fall during the term of the options. Traders can consider buying ₹760 put and simultaneously selling ₹740 put. For this, traders will have to incur an initial outflow of ₹7.5/contract (₹3,750) to construct bear-put strategy. The amount paid will be the maximum loss one can incur in this strategy. For this to happen, HPCL will have to close at or above ₹760.
Similarly, the profit potential is also limited. A maximum profit of ₹6,250 or ₹12.5/contract is possible in this strategy on a close at or below ₹740.
Follow-up: Last week, we had advised a bull-call spread on Arvind. The stock has moved on expected lines. We advice traders to hold the strategy and close the position once Arvind closes above ₹290 conclusively.
Comments
COMMENT NOW
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.