The long-term outlook for Hindustan Unilever (₹1,635.95) is positive, though in the short term, the stock may remain volatile with an upward bias. HUL finds an immediate support at ₹1,592 and a major one at ₹1,509. A close below the latter will alter the current bullish outlook on the stock. HUL faces an immediate resistance at ₹1,687 and a close above ₹1,719 will reconfirm the bullish trend. In such a situation, the stock can scale to a new high above ₹1,808.65.
F&O pointers: Though the HUL September futures shed open positions on Friday, it witnessed a consistent build-up of open positions over the last two weeks. Option trading also presents a bullish view as call options as wide as ₹1,800-strike witnessed strong activity. The stock may find a strong support at ₹1,560 where open positions remain strong.
Strategy: Traders can consider a plain vanilla call option on Hindustan Unilever. Buy ₹1,640-strike call option, which closed with a premium of ₹24.45. With market lot for HUL being 600 shares, one has to shell out ₹14,670, which will be the maximum loss one can suffer. For that to happen, HUL should not cross ₹1,640.
While ₹1664.45 is a break-even point, any upmove from there will yield good returns. We advice traders to hold the position till the expiry day or if the loss mounts to ₹8,500. Profit potential is unlimited if HUL surges in the September series. Traders with a high-risk appetite and who can withstand wild swings can contemplate this strategy.
Follow-up: Hold YES Bank put option.
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.