The long-term outlook for Hindustan Unilever (₹1,635.95) is positive, though in the short term, the stock may remain volatile with an upward bias. HUL finds an immediate support at ₹1,592 and a major one at ₹1,509. A close below the latter will alter the current bullish outlook on the stock. HUL faces an immediate resistance at ₹1,687 and a close above ₹1,719 will reconfirm the bullish trend. In such a situation, the stock can scale to a new high above ₹1,808.65.

F&O pointers: Though the HUL September futures shed open positions on Friday, it witnessed a consistent build-up of open positions over the last two weeks. Option trading also presents a bullish view as call options as wide as ₹1,800-strike witnessed strong activity. The stock may find a strong support at ₹1,560 where open positions remain strong.

Strategy: Traders can consider a plain vanilla call option on Hindustan Unilever. Buy ₹1,640-strike call option, which closed with a premium of ₹24.45. With market lot for HUL being 600 shares, one has to shell out ₹14,670, which will be the maximum loss one can suffer. For that to happen, HUL should not cross ₹1,640.

While ₹1664.45 is a break-even point, any upmove from there will yield good returns. We advice traders to hold the position till the expiry day or if the loss mounts to ₹8,500. Profit potential is unlimited if HUL surges in the September series. Traders with a high-risk appetite and who can withstand wild swings can contemplate this strategy.

Follow-up: Hold YES Bank put option.

Related Topics
comment COMMENT NOW