Technical Analysis

Bear call spread in Ashok Leyland

KS Badri Narayanan | Updated on November 16, 2014 Published on November 16, 2014

The long-term outlook for Ashok Leyland remains bullish as long as it stays above ₹36.5. The stock finds immediate support at ₹49.1; the next crucial one is at ₹46.5. It can touch ₹59.5 if it sustains its current rally. However, the stock is likely to face resistance in the near term.

F&O pointers: The stock has been adding open interest. This indicates bullish momentum. Option trading indicates a range of ₹50-55 for the stock.

Strategy: Traders can consider a bear call spread on Ashok Leyland. This can be initiated by simultaneously selling ₹50 call and buying ₹57.5 call. This strategy will yield an income of ₹3.9/contract, as these options closed with a premium of ₹4.75 and ₹0.85 respectively.

This could also be the maximum profit one can earn from this strategy. For that to happen, Ashok Leyland must settle at or below the lower strike price of ₹50.

However, traders could also lose ₹3.6/contract if Ashok Leyland rallies above ₹57.5 at the time of expiry.

Since the market lot is 11,000 per contract, this strategy is best suited for traders who can bear high risks.

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