Narrow movement seen in HCL Tech

I bought HCL Technologies June futures at Rs 754.60 Please advice . - Angshuman Nandi

HCL Tech: The long-term outlook remains positive for HCL Technologies, as long as it stays above Rs 588. Of late, however, the stock has been under pressure after hitting all-time high in April. It now finds immediate support at Rs 681 and resistance at Rs 765. Only a close above Rs 765 will trigger a fresh rally. It is likely to move in a narrow range before charting a clear direction.

F&O pointers: The counter witnessed marginal accumulation of open interest on Friday. Options are not that active.

Strategy: It is better to exit from HCL Technologies and re-enter once it takes a clear direction. However, if you can afford risk, hold your position with a stop loss at Rs 726.

Can I initiate strangle in United Spirits using 2600 CE and 2200 PE? Secondly, the stock is falling but put premiums are hardly rising. Please explain. –Kishore Lekhwani .

United Spirits: The stock, which has been on a song in recent times, is losing steam. However, the current bull momentum will sustain as long as it stays above Rs 2,332. Only a close below Rs 1,810 will change the long-term outlook negative.

F&O pointers: Marginal accumulation of open interest is seen on United Spirits June futures. In options, activity was mainly centered around 2,300 and 2,500 strikes, indicating the range for the stock.

Strategy: Strangle on United Spirits may pay well. The only risk is the time value.

Regarding your second query, only in-the-money options react to the swings of the underlying price movement. This is because most of the times out-of-the money options are illiquid.

NOTE: The analysis and opinion expressed in this column are based on F&O data available at this point of time and on technical analysis based on past price movements. There is risk of loss in trading.

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