Technical Analysis

Bull put spread on Idea Cellular

KS Badri Narayanan | Updated on January 23, 2018 Published on May 03, 2015

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The outlook remains positive for Idea Cellular. The stock has support at ₹165 and resistance at ₹184. A conclusive close above the resistance will trigger fresh rally in the stock. In that event, it could test new high, above ₹204 levels. But, inability to sustain ₹165 has the potential to drag Idea Cellular to ₹144.

F&O pointers: Idea futures, at 65 per cent, witnessed higher rollover into May series. Option trading indicates a stiff resistance at ₹190 and ₹200 zone and the support at ₹170.

Strategy: We advice traders to consider bull put spread on Idea Cellular. This can be initiated by selling ₹185-put and simultaneously buying ₹175-put, which closed at ₹12.90 and ₹7.2 respectively.

This strategy will ensure an inflow of ₹5.7/contract (or ₹11,400) and that would be maximum profit one can derive from this strategy. For that to happen, Idea Cellular should close at ₹185 or above at the time of expiry. On the other hand, a close below ₹175 will hurt the position. In that case, a maximum loss of ₹4.3/contract (or ₹8,600) will occur. We advise traders to quit the position if the loss mounts to ₹3,500.

Published on May 03, 2015
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