Write a call on Arvind

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.

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