Technical Analysis

Maruti may see some volatility

KS BADRI NARAYANAN | Updated on October 26, 2014 Published on October 26, 2014

The long-term outlook for Maruti Suzuki (₹3,164.6) remains positive, as long it stays above ₹2,640. However, in the short term the stock could see some volatility. The stock finds immediate support at ₹2,903. If the stock is able to sustain above this level, it could head towards ₹3,450.

F&O pointers: The November contracts on Maruti Suzuki maintained a healthy premium, signalling long rollovers. Options are not very active for November. Current month contracts indicate positive bias.

Strategy: Traders can consider a long strangle on Maruti Suzuki, using November contracts. This can be initiated by buying ₹3,350 call and ₹2,900 put.

They closed at a premium of ₹37.15 and ₹17.95 respectively. The strategy involves an initial outflow of about ₹6,890. This can also be the maximum loss, which will occur if Maruti Suzuki closes between ₹3,350 and ₹2,900 at the time of expiry.

A close below ₹2,845 or above ₹3,405 will show profit. Traders can consider exiting the position if the loss mounts to ₹1,850.

Follow-up: Last week, we advised a writing call on Arvind. Traders can hold the position till expiry.

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