Technical Analysis

Game plan for Sun TV

KS Badri Narayanan | Updated on December 05, 2020 Published on December 05, 2020

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.)

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on December 05, 2020
This article is closed for comments.
Please Email the Editor