Consider bull-call spread on Havells India

The outlook for the stock of Havells India (₹711.85) remains positive. A conclusive close above ₹737 can trigger a fresh rally. The stock finds immediate support at ₹667, and a close below that can drag Havells India futures to ₹589. A conclusive close below the latter will alter the current bullish view on the stock.

F&O pointers: Havells India’s futures on Friday added 2.49 lakh shares (or 5.18 per cent) in open interest and maintained a healthy premium of ₹4.35 against the spot close of ₹707.55. This signals healthy rollover of long positions to March contracts. Options trading indicates that the stock can witness a range-bound movement in the ₹680-740 band.

F&O strategy: Traders can consider a bull-call spread on Havells India. This can be initiated by buying the ₹720-call and simultaneously selling the ₹740-call options of March. They closed with a premium of ₹18.10 and ₹11, respectively. Market lot is 1,000.

The strategy will cost ₹7.1/call or ₹7,100 to the trader, and this will be the maximum loss one can suffer. This will happen if Havells closes at or below ₹720. A profit potential of ₹12.9/call or ₹12,900 is possible if Havells India closes at or above ₹740. Traders will not make profit or loss if the stock closes at ₹727.10. Hold the position for at least two weeks.

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