The outlook for the stock of Maruti Suzuki (₹12,337.70) is positive. The stock finds immediate support at ₹11,595 and the major one at ₹10,935. On the other hand, if the current trend sustains, the stock has the potential to reach ₹13,975. We expect the stock to maintain the current bullish trend.
F&O pointers: Maruti March futures closed at ₹12,314.75 and April futures at ₹12,400.45 against the spot close of ₹12,337.70. Maruti witnessed a rollover of 26 per cent and the premium for April contracts indicates long rollover. Option trading indicates a potential movement between ₹11,000 and ₹13,000.
Strategy: Traders can consider a calendar bull-call spread using 12500-strike. This can be initiated by selling the current month 12500-call and simultaneously buying April contract. As these options closed with a premium of ₹54.80 and ₹284.15, this strategy would cost ₹11,467.50 (market lot 50 shares).
The maximum loss would be the premium paid that would happen if the stock failed to cross ₹12,500.
However, profit potential is very high if the stock slips immediately and rises sharply.
We advise traders to hold the position for two weeks and review it later. Traders can aim for a profit of ₹500 (combined premium) while stop-loss can be placed at ₹85 (combined option premium).
Follow up: Stop-loss would have triggered on India Cements call option recommended last week.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading