Coal India (Rs 283): The immediate-term outlook for Coal India is neutral. The stock is expected to move in a narrow range between Rs 260 and Rs 310. Only a close above Rs 330 will change the medium-term outlook positive and the stock could touch Rs 355.
A close below Rs 260, however, may trigger fresh selling. This will drag the stock to Rs 225.
Short straddle strategy is best suited when one expects the underlying stock to move in a narrow range. Maximum profit in this strategy is the premium collected, i.e., about Rs 14,000 (Rs 14.3 * 1,000), while the loss could be unlimited. Loss will occur if Coal India moves sharply in either directions. A close below Rs 265 or above Rs 295 will make the position unprofitable. . Hold the position till expiry for maximum profit.
Traders could consider closing the position, if the loss hits Rs 4,000. Writing option also involves higher margin commitments.
Follow-up: Last week, we advised a long on Adani Power, for which stop-loss would have got triggered.
( Note: Feedback or queries (on positions) may be sent to f&o@thehindu.co.in or blfuturesoptions@gmail.com by Sunday noon. Replies will be published on Monday.)