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.

Read the rest of this article by Signing up for Portfolio.It's completely free!

What You'll Get





Related

This article is closed for comments.
Please Email the Editor