The long and short-term outlook for Reliance Power (₹ 41.15) remains negative. The stock has an immediate resistance at ₹44 and the next hurdle is at ₹53.5. The short-term outlook will turn positive only on a conclusive close above ₹53. In that event, the stock has the potential to target ₹72.40. But as long as it trades below ₹44, it is all set to breach its life-time low of ₹38.05 recorded in November.

F&O pointers : The Reliance Power counter witnessed a decent rollover of 25 per cent to January series. No fresh build-up of long positions was seen. On the contrary, a lot of unwinding of positions has been happening in Reliance Power. Options are not very active. However, trading in options indicates that ₹40 is a crucial level.

Strategy : Traders can consider buying 40-put on Reliance Power of January contracts. The option closed with a premium of ₹1.25 on Friday. With the market lot being 12,000, this strategy could cost investors ₹15,000. This would be the maximum loss one can suffer in this strategy. For that to happen, the stock should close at or above ₹41.25.

However, profit potential is very large, if the stock turns negative. Hold the position till January 10. Traders could exit from this strategy if the loss mounts to ₹8,500.

Follow-up : Stop-loss would have triggered for Aurobindo Pharma.

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