Technical Analysis

Write a call on Arvind

KS BADRI NARAYANAN | Updated on October 19, 2014 Published on October 19, 2014

While the long-term outlook remains positive for Arvind, in the short term, the stock is likely to come under pressure. A conclusive close below ₹272 can trigger a fresh fall to ₹234. A close below ₹234 will alter the long-term positive outlook. The stock finds immediate resistance at ₹315. Only a close above this level will reconfirm the bullish stance.

F&O pointers: Arvind futures shed open interest, despite the stock gaining about 1.7 per cent on Friday. This indicates unwinding of positions and emergence of call writers, which mean limited upside. Option trading indicates a range of ₹260-300.

Strategy: Consider writing a ₹300 call on Arvind. It closed at a premium of ₹2.30. Maximum profit in this strategy will be the premium collected, which works out to ₹4,600, as the market lot is 2,000 shares. This strategy is for traders who can bear the risk, as loss can be unlimited if Arvind reverses direction and closes above ₹302.30.

For maximum profit, Arvind has to settle below ₹300 at the time of expiry.

Traders, who can take higher risk can sell ₹290 call, which closed at ₹3.75. This will entail an initial inflow of ₹7,500, which will be the maximum profit. A close above ₹293.75 will start pinching the position.

Read further by subscribing to

The Hindu Businessline

What You'll Get

  • Web + Mobile

    Access exclusive content of the Hindu Businessline across desktops, tablet and mobile device.

  • Exclusive portfolio stories and investment advice

    Gain exclusive market insights from the Hindu Businessline's research desk.

  • Ad free experience

    Experience cleaner site with zero ads and faster load times.

  • Personalised dashboard

    Customize your preference and get a personalized recommendation of stories based on your intrest.

This article is closed for comments.
Please Email the Editor