Technical Analysis

L&T Fin Holdings: Put may pay off

KS BADRI NARAYANAN | Updated on January 09, 2018

The long-term outlook remains positive for L&T Finance Holdings (₹187.45), though it may face headwinds in the short term. The stock finds immediate support at ₹175.35 and the next crucial one at ₹163.80. A close below the latter will change the outlook negative. A close above ₹206 will confirm the bullish trend. In such an event, the stock could move higher to ₹252.

F&O pointers: L&T Finance Holdings futures shed open interest along with fall in share price. Options indicate that the stock could face resistance at ₹200 and ₹210.

Strategy: Traders could consider buying the ₹185-strike put and simultaneously selling the ₹180-strike put. They closed with a premium of ₹4.45 and ₹2.65 respectively. As the market lot is 4,500 shares per contract, it would work out to outflow of ₹8,100, which would be the maximum loss incurred, if L&T Finance Holdings rallies and closes at or above ₹185.

A maximum profit of ₹14,400 is possible, if the stock closes at or below ₹180 at the time of expiry.

Published on November 12, 2017

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