Technical Analysis

Future Perfect: Consider a bull-call on DLF

KS BADRI NARAYANAN | Updated on January 13, 2018 Published on March 05, 2017

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DLF (₹144.85) rules at a crucial level. The outlook will turn positive only on a close above ₹157. In such a scenario, a rise to ₹169 and ₹172 is possible. If the rally sustains, the stock can even surge to₹224. On the other hand, the outlook will turn negative if DLF declines below ₹135. A close below this support can take it to ₹113.

F&O pointers: The DLF futures sheding open positions on Friday signals profit booking.

Trading in put options indicates strong support at ₹140, while call options suggest DLF may face resistance at ₹150 and at ₹160 levels.

Strategy: Traders may consider a bull-call spread strategy on DLF.

This can be initiated by selling 150 call and simultaneously buying 140 call. These options closed with a premium of ₹4.10 and ₹8.8 respectively.

As this strategy costs an inflow of ₹4.70 per contract, one could suffer a maximum loss of ₹23,500 (market lot 5,000 units per contractif DLF closes at or below ₹140.

On the other hand, traders can receive a maximum profit of ₹26,500 if DLF closes at or above ₹150. Traders can hold this position until expiry. Exit the position if the loss mounts to ₹8,000.

Follow-up: Hold DHFL position.

Published on March 05, 2017
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