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The long-term outlook for YES Bank (₹1,488) remains positive. However, in the short term, the stock may come under pressure. YES Bank finds immediate support at ₹1,460 and a close below that level will weaken it towards ₹1,328. Only a close below ₹1,124 will alter the long-term positive view. To reconfirm the positive outlook, the stock has to close above ₹1,563.
F&O pointers : The counter added 17.57 lakh shares amidst falling share price. This indicates heavy accumulation of short positions.
However, the YES Bank May futures maintains a good 5-point premium over the underlying. Option trading indicates that the stock could move in the ₹1,400-₹1,600 range.
Strategy: Traders could consider calendar bear-put spread strategy. This can be initiated by selling YES Bank May ₹1,500-put and simultaneously buying the same strike in June series. They closed with a premium of ₹45.35 and ₹66.50 respectively. That means, one has to spend ₹7,402.50 to initiate this strategy. Maximum loss would be the premium paid and that will happen if YES Bank rises sharply.
The profit potentials are huge if YES Bank stays or moves up immediately and falls in June.
Hold the position till the second week of June. Traders should mind that the stock will be volatile in the near term.
Follow-up : Exit Tata Motors DVR.
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