Technical Analysis

Call on Just Dial

KS BADRI NARAYANAN | Updated on January 20, 2018 Published on March 22, 2016

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The long-term outlook will remain negative for Just Dial (₹643) as long it stays below ₹855. However, the short-term outlook turned positive for the stock. While the immediate resistance is at ₹681, the next one is at ₹757. If the stock sustains the current recovery, it will hold potential to reach the key resistance level of ₹855. The stock finds immediate support at ₹602 and the major one at ₹554.

F&O pointers: The Just Dial March futures shed open interest on Friday, but April futures witnessed accumulation of long positions. Trading in options suggests that the stock could swing wildly, as both calls and puts witnessed unwinding of open positions.

Strategy: Traders can consider a bull-call spread on Just Dial. This can be initiated by buying 650 call, while simultaneously selling 700 call. These options closed with a premium of ₹26.05 and ₹11.10 respectively on Friday. Based on these premiums, one has to pay ₹14.95 per contract (or ₹7,475 — as market lot is 500 shares) to adopt this strategy.

While the maximum loss will be the premium paid (that is, ₹7,475), maximum profit of ₹17,525 is possible in this strategy, if the stock manages to settle at or above ₹700 at the time of expiry.

We advise traders to hold the position till expiry. This strategy is for traders who are not averse to taking risk, as just seven trading sessions are left for this month’s expiry. This week, market is open only for three days as Thursday and Friday are closed for Holi and Good Friday.

Follow up: Book profit in Voltas.

Published on March 22, 2016
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