DLF (Rs 129.7): The medium and long-term outlook remains negative for DLF. Only a close above Rs 187 will negate the current downtrend on the stock. In the short-term, it is likely to move in a narrow range with a negative bias. It finds immediate support at Rs 120, a fall below this could drag the stock to two-digit figure.

F&O pointers: The DLF September futures added close to 2 lakh shares in open interest on Friday. Option trading indicates Rs 130 as a crucial level as both puts and calls added open interests. Heavy accumulation in Rs 100-strike put and Rs 150-strike call points a broader range for the stock movement.

Strategy: Traders could consider short strangle on DLF. This can be constructed by selling Rs 110 put and Rs 145 call, which closed at Rs 4 and Rs 5.8 respectively.

Short strangle strategy is best suited when one expect a range-bound movement in the underlying. Maximum profit in this strategy is the premium collected, which works out to Rs 9,800, as the market lot is 1,000 units a contract.

For a maximum profit to occur, DLF should settle between Rs 110 and Rs 145 at the time of expiry. Loss could, however, be unlimited if DLF swings wildly in any one of the direction. Either a close below Rs 101 or above Rs 154 will make the position negative. Traders with risk appetite can consider this strategy and hold it for at least two weeks.

( Note: 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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