Technical Analysis

Short strangle on IRB Infra

KS BADRI NARAYANAN | Updated on January 24, 2018 Published on June 07, 2015


Despite the recent fall, the outlook would remain positive for the stock of IRB Infrastructure Developers (₹233), as long as it stays above ₹216. While a close below ₹199 will make the outlook negative, the stock will gain bullish momentum on a decisive close above ₹244. We expect the stock to move sideways, before pursuing a clear trend.

F&O pointers: The stock added over two lakh shares in open interests on Friday. However, most of the accumulations were on the short side. Options are not very active and indicate a resistance at ₹250.

Strategy: Traders can consider a short strangle on IRB Infrastructure. This can be initiated by selling ₹260-call and ₹210-put. The options closed with a premium of ₹1.7 and ₹1.85 respectively. The maximum profit in this strategy would be the premium earned, which works out to ₹3,550. For that to happen, the IRB Infra stock should move in the ₹210-260 range. Loss could be unlimited if the stock moves in a single direction, either up or down.

A close below ₹206.5 or above ₹263.5 will start affecting the position negatively. This strategy is for traders who can withstand the wild swings. If the loss mounts to ₹2,500, traders can consider exiting from the position.

Published on June 07, 2015
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