Technical Analysis

Consider bull-call spread on Just Dial

KS Badri Narayanan | Updated on June 02, 2019 Published on June 02, 2019

The short- and medium-term outlook is positive for Just Dial (₹765.60) though the long-term outlook is still negative.

If the current trend sustains, Just Dial could test resistance at ₹852, while it finds immediate support at ₹663.

A close below ₹566 will alter the current bullish view on the stock and a conclusive close above ₹1,084 will even change the long-term outlook to positive for Just Dial.

F&O pointers: Just Dial June futures closed at ₹714.75 on Friday at a heavy discount with respect to the spot close of ₹765.60. This is due to the sharp fall the stock witnessed during the closing hours on Friday, when the F&O traders offloaded their positions quickly. Amid volatility, Just Dial June futures added 5.2 per cent (or 1.21 lakh shares) on Friday, signalling a positive bias. Option trading indicates a range of ₹660-800.

Strategy: Traders can consider a bull-call spread on Just Dial. This can be initiated by selling ₹760-call that closed at ₹20.75 and, simultaneously, buying the ₹740-call, which closed at ₹27.85.

As the market lot is 1,400 shares, this strategy will cost traders ₹9,940, which would be the maximum loss one can suffer.

If the stock settles at ₹740 or below, the maximum loss will happen.

A maximum profit of ₹18,060 is possible if Just Dial closes at or above ₹760 at the time of expiry.

We advice traders to hold the position till expiry of June contracts.

Follow-up: Hold Lupin positions.

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