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The long-term outlook remains positive for ICICI Bank. It finds immediate support at ₹332 and the next crucial one at ₹298. As long as the stock trades above ₹298, it can target ₹385. But in the near term, the stock is likely to be in a consolidation mode, until the company announces its third quarter results on January 30.
F&O pointers: ICICI Bank January futures saw unwinding of 42.56 lakh shares on Friday, indicating profit taking by traders. Option trading indicates ₹340 and ₹360 as crucial levels.
Strategy: Traders can consider short straddle on ICICI Bank. This can be constructed by selling ₹352 call and put of ICICI Bank. They closed with a premium of ₹9.2 and ₹8.9 respectively.
This strategy will result in an inflow of ₹22,625 (market lot 1,250). This will also be the maximum profit one can earn from this strategy. For that to happen, ICICI Bank has to settle around ₹352 at the time of expiry. However, loss could be unlimited if ICICI Bank swings sharply in either direction — up or down. A close below ₹333 or above ₹370 will start hurting the position. This strategy is strictly for traders who can afford to bear the risk. Traders could exit from this strategy, if the loss mounts to ₹10,625.
Follow-up: Investors can hold on to the short strangle strategy on Infosys that was recommended last week.
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