The short-term outlook for Sun TV Network (₹443.8) appears to be range-bound. The stock faces an immediate resistance at ₹497 and the next one at ₹527 while it is currently ruling at a support level. A conclusive close below ₹440 could drag it lower to ₹417 or even to ₹396. The long-term outlook appears negative as long as Sun TV rules below ₹703 and in the medium term, it can swing in the broad range between ₹350 and ₹650.

F&O pointers: The Sun TV December futures closed at ₹447.05, with a shade premium against the spot price. Open interest jumped 10-fold to one crore shares last month. Along with rise in open interest, the stock price too climbed due to long accumulations. Nevertheless, build-up in option chain indicate a possible trading range of ₹400 to ₹500 for the scrip.

Strategy: We advise traders to consider a short-strangle, a risky strategy, on Sun TV. This can be initiated by selling 380-strike put option (December expiry) and the 520-strike call option (December expiry). As they closed with a premium of ₹3.65 and ₹4.75, respectively, this strategy will create an inflow of ₹12,600 (sum of the premiums collected i.e., ₹8.40 multiplied by lot size of 1,500 shares).

The inflow (₹12,600) will be the maximum profit one can earn from this strategy which can be realised if Sun TV closes between ₹380 and ₹520 by the end of the expiry. But a close below ₹371.6 or above ₹528.4 will start pinching the traders. As the loss can be technically unlimited in the strategy if gone wrong, we advise risk-averse traders to stay away from this. Consider holding the position for at least two weeks.

( Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.)

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