Technical Analysis

Buy a call option in YES Bank

KS BADRI NARAYANAN | Updated on January 24, 2018 Published on May 31, 2015


The long as well as the immediate term outlook for YES Bank (₹882.3) is positive. After moving sideways in the last three months, the stock may witness a break out. If the current trend sustains, YES Bank will touch ₹1,025 and even ₹1, 150.

For that to happen, YES Bank has to sustain above ₹882 and conclusively close above ₹892. Only a close below ₹793 will negate the short-term positive outlook.

F&O pointers: YES Bank June futures added 4.5 lakh shares (or about 4.5 per cent over the previous day) in open positions on Friday. Option trading indicates that the stock could face resistance at ₹900 while ₹860 may act as a support.

Strategy: We advice traders to buy 900-strike call option. It closed with a premium of ₹25.25 on Friday.

The maximum loss in the strategy is the premium paid, which works out to ₹6,312.25, given the market lot of 250 a contract. However, profit could be unlimited, if YES Bank moves up sharply. We advise traders to exit from the position, if the premium slips to ₹10. On the positive side, traders could set an initial target of ₹75.

Follow-up: Investors can exit from SBI position, if the 280-call option premium slips to ₹4 or rises to ₹22.

Published on May 31, 2015
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