Comments
The shares of Hindustan Unilever (₹1,007) are in a bull grip. If the current trend sustains, HUL will reach ₹1,225. Only a close below ₹933 will turn the short-term outlook negative. Immediate support is at ₹975, the long-term support is at ₹840.
F&O pointers: The HUL May futures added fresh long positions on Friday. However, the counter witnessed a rollover of just 3 per cent June series. Option trading indicates that the stock may face resistance at ₹1,020 while ₹990 may act as a support.
Strategy: Traders can consider a bull calendar spread on HUL by selling the current month ₹1,000-call option and simultaneously buying the same strike of June month. These options have closed with a premium of ₹15.25 and ₹26.80 respectively and so the total outgo will be ₹11.55 per contract. As the market lot is 600 shares, in absolute term, traders have to fork out ₹6,930.
The net premium paid would the maximum loss one can suffer in this strategy and that would happen if HUL closes at or below ₹1,000 at the time of June contract expiry.
The profit potential is unlimited, if HUL surges sharply, particularly in June series.
Follow-up: Hold YES Bank put option.
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.