Technical Analysis

Future Perfect: Consider long strangle on ICICI Bank

KS Badri Narayanan | Updated on August 04, 2019 Published on August 04, 2019

The outlook remains positive for ICICI Bank (₹410.7). The stock finds immediate resistance at ₹436 and a close above this level will trigger fresh rally. If the stock maintains the momentum, it has the potential to reach ₹510.

On the other hand, ICICI Bank finds a crucial support at ₹377, and a close below this level can negate the immediate-term positive outlook.

ICICI Bank finds a major support at ₹340.

F&O pointers: ICICI Bank August futures witnessed healthy accumulation of open positions.

On Friday, it added over 51.20 lakh shares. The futures, which has been moving in ₹442-404 range, saw open positions increasing from 12.54 lakh shares to the current level of 8.42 crore shares in the last one month.

 

 

Option trading indicates a movement in the range of ₹410-440 for the stock.

Strategy: Traders can consider a long strangle on ICICI Bank.

This can be initiated by buying ₹400-strike put and ₹425-call. They closed with premiums of ₹6.55 and ₹6.10 respectively.

That means, traders will have to fork out ₹17,393.75, which would be the maximum loss one can suffer. ICICI Bank has to settle between the strike price, that is, between ₹400 and ₹425 at the time of expiry.

However, profit potentials are high, if ICICI Bank moves in any one of the direction, a close above ₹437.65 or below ₹387.35 will start yielding positive results.

We advice traders to hold the position for at least three weeks or exit the position if the loss mounts to ₹8,500.

Follow-up: Stop-loss would have triggered for Tata Motors.

Published on August 04, 2019
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