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The Karnataka Bank (₹151.5) rules at a crucial level. Immediate resistance is at ₹159, a close above which could trigger a fresh rally to ₹235.
Support is at ₹139 and a close below ₹125 will change the short-term outlook to negative. Long-term positive view will remain intact as long as the stock rules above ₹102.
F&O pointers: Just about 10 per cent rollover signals a marginal build up of long positions in the September series. Option trading indicates that ₹160 is a crucial level.
Strategy: We advice calendar spread on Karnataka Bank by selling ₹150-call of August series and simultaneously buying ₹150 September-call.
They closed with a premium of ₹3.95 and ₹7.15 respectively.
One has to invest ₹12,160 (3,800 shares per lot) to initiate the strategy.
The total loss one can suffer in this strategy is the premium paid (₹12,160), for which Karnataka Bank has to settle at or below ₹150.
Profit potential is limited, especially, if the stock loses value immediately and gains momentum in September.
A close above ₹157.15 will start yielding positive results. Conservative traders can stay away from this.
Follow-up: Exit from TVS Motor option.
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