Technical Analysis

YES Bank: Use options

KS BADRI NARAYANAN | Updated on January 16, 2018 Published on September 18, 2016


The long-term outlook remains positive for YES Bank (₹1,168). However, a close below ₹1,083 can alter the view and a close below ₹949 can change the outlook to negative. The stock finds immediate resistance at ₹1,254 and a close above ₹1,349 will trigger a fresh rally that will take YES Bank to new highs.

F&O pointers: YES Bank’s September futures added fresh shorts on Friday. The contract saw accumulation of 10.23 lakh shares even as the underlying stock fell about 4 per cent. YES Bank ₹1,300-call option saw huge accumulation of open positions, which could act as a strong resistance.

Strategy: Traders can consider the short strangle strategy on YES Bank using October contracts. This can be initiated by selling ₹1,300-call and ₹1,000-put simultaneously. They closed with premiums of ₹19.95 and ₹14, respectively. That means, this strategy will yield an inflow of ₹33.95/per contract, which would be the maximum profit one can earn from the strategy. As the market lot is 700 shares per contract, this will result in an inflow of ₹23,800. To yield maximum profit, YES Bank has to settle between ₹1,300 and ₹1,000 at the time of expiry.

However, loss will be unlimited in this strategy. A close above ₹1,334 or below ₹966 will start affecting the traders' position adversely.

This strategy is strictly for traders who can withstand wild swings, as YES Bank is a high-beta stock.

We advice traders to hold the position till October 10.

Published on September 18, 2016
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