Technical Analysis

Consider a long strangle strategy on YES Bank

KS Badri Narayanan | Updated on July 14, 2019 Published on July 14, 2019


The long and medium-term outlook remains negative for the stock of YES Bank (₹94.1). Only a close above ₹163 will change the outlook to positive for the bank. However, in the short term, the stock may remain volatile with a positive bias, before taking a clear direction. A close below ₹86 will trigger a fresh downfall for the stock. If the current bullish momentum sustains, YES Bank could touch ₹128.


F&O pointers: YES Bank July futures added fresh long positions in the last few days. Option trading indicates a range of ₹80 to ₹120.

Event: YES Bank will announce its results on Tuesday. The stock could swing wildly if it reports rise in bad loans or better-than-expected results.

Strategy: Traders can consider a long strangle strategy on YES Bank. This can be initiated by buying ₹90-put and ₹100-call simultaneously. As they closed with a premium of ₹4.45 and ₹4.65 respectively, this would cost traders ₹22,220 (market lot 2,200 shares).

A close above ₹110 or below ₹80 will start yielding positive results. Traders will suffer a maximum loss of the premium paid (₹22,220) , if YES Bank is stuck in the ₹80-₹100 range.

We advice traders to exit the position if loss mounts to ₹6,500 or on profits of ₹10,000. Hold the position at least for next Five days.

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