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The medium and long-term trend remains negative for Tata Steel (₹328.9). It finds crucial support at ₹301 and resistance at ₹342.
A close above ₹342 can lift Tata Steel to ₹366 and then to ₹430. On the other hand, a dip below ₹301 can take the stock towards ₹267. We expect the stock to show some resilience after the recent sharp fall that the stock had witnessed.
F&O pointers: Tata Steel futures also witnessed only a weak-to-modest rollover of 12 per cent. Trading pattern in options indicates that Tata Steel may move in the range of ₹320-350 in the near term.
Strategy: Traders can consider a calendar call spread strategy on Tata Steel using March and April options. This can be initiated by selling ₹330-call of March while simultaneously buying the same strike of April. They closed with a premium of ₹5.4 and ₹15.5 respectively.
The maximum possible loss could be the net premium paid, that is ₹10.1 in this strategy. Market lot is 500.
However, profit potential is unlimited, if the stock pursues its momentum in April.
We advice conservative traders to book profit if the premium reaches either ₹36 or ₹24.
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