Short strategy on NTPC, Unitech



NTPC (Rs 166.6): The outlook for NTPC remains negative.

The stock could not test fresh lows going ahead. NTPC finds an immediate resistance at Rs 190 and only a close above Rs 213 would change the outlook positive for the stock.

The stock is placed at a crucial support level.

One more conclusive close below Rs 167 would trigger a fresh sell-off. In that event, NTPC is likely to touch Rs 153 initially and then Rs 136.

F&O pointers: NTPC added fresh short positions on Friday's trade. Options are not that active. Option segment indicates a negative bias, as 170 and 160 calls witnessed accumulation of open interest.

Strategy: Consider going short on NTPC September futures with a tight stop-loss at Rs 174 (spot price on a closing day basis) for an initial target of Rs 153. Shift the stop-loss to Rs 167 if NTPC opens below that level on Monday. Market lot of NTPC is 2,000.

Alternatively, traders can consider writing 180 Sept call, which closed around Rs 1.10 on Friday.

Maximum profit in the strategy is the premium collected (i.e. R 1.1 * 2,000 market lot), while loss could be unlimited if NTPC surges sharply.

Besides, writing option involves margin commitments. So this strategy is for traders who can afford to bear those risks. Hold this position for at least two weeks.

Unitech (Rs 27): The long-term outlook remains negative for Unitech. The stock now finds immediate resistance at Rs 30.5 and the next one at Rs 34.5. Only a conclusive close above Rs 45.35 would mitigate the negative outlook on the stock.

F&O pointers: Unitech added fresh short positions on Friday. Options are not that active.

Strategy: Traders can consider short on Unitech with a stop-loss at Rs 29 for an initial target of Rs 25. Market lot is 8,000 units per contracts, so traders with high risk appetite can consider this.

Follow-up: Last week, we had advised traders to go short on Coal India and long on ABB Ltd. Stop loss would have been triggered for Coal India.

Though ABB moved on expected lines, it did not touch the mentioned target.

Traders who are holding both the positions can continue to do so. For Coal India, the revised stop-loss is Rs 413. We had also advised traders to write 380 call on Coal India. This position turned negative, as the stock reversed direction. We had also advised a short strangle on Suzlon in the August series. However, the position closed in the negative.

Feedback or queries (on positions) may be sent to >f&o@thehindu.co.in, >blfuturesoptions@gmail.com by Sunday noon. Replies will be published on Monday.

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