While the long-term outlook will turn positive for ONGC (₹256) only on a close above ₹312, in the short term, the stock is likely to turn volatile with positive bias. It finds immediate resistance ₹265 and support at ₹242. A close below ₹214 will turn the outlook negative for ONGC. We expect ONGC to swing in the range between ₹200 and ₹270 in the short term.

F&O pointers: ONGC September futures shed open interest on Friday. However, option trading indicates a positive bias, as calls shed open interest.

Strategy: Traders can consider short strangle on ONGC. This can be initiated by selling ₹270-call and ₹240-put. These options closed with a premium of ₹2.10 and ₹1.25 respectively. That means, traders will get an inflow of ₹8,375 (market lot is 2,500), which will be the maximum profit they can earn. For that to happen ONGC has to settle between ₹240 and ₹270.

A close above ₹273.35 or below ₹236.65 will start pinching the traders. Hold the position for at least two weeks.

Follow-up: Traders who followed option strategy could book profits. For those who hold long futures, can do so with stop-loss mentioned.

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