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Hero MotoCorp (Rs 1,541.9): The long-term outlook will turn positive for Hero MotoCorp only if it moves past Rs 1,855. The downtrend is likely to continue for the stock in the short-term. It finds immediate support at Rs 1,448, and a close below that will change the long-term outlook negative. Immediate resistance is placed at Rs 1,625.
F&O pointers: The Hero MotoCorp futures witnessed a rollover of just 44 per cent to April series. Option trading indicates negative bias, as call options added open positions.
Strategy: Traders should consider selling Hero MotoCorp futures with a stop-loss at Rs 1,625. Stop-loss can be shifted to Rs 1,540, if the stock closes below that level with a target of Rs 1,448.
Alternatively, traders could also consider buying Rs 1,600 put, which closed at Rs 36. As the market lot is 125 units, this will entail an initial outflow of Rs 6,000. While the maximum loss in the strategy is the premium paid, profit could be unlimited if Hero MotoCorp falls sharply as expected.
Follow-up: Last week, we advised traders to consider bear call spread strategy on SAIL. The strategy ended in the positive, as the stock closed in the negative as expected.
Feedback or queries (on positions) may be sent to blfuturesoptions@gmail.com by Sunday noon. Replies will be published on Monday.
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