The stock of Marico (₹537.45) is ruling at a crucial level. Though the long-term trend remains bullish, the stock may face downward pressure in the short term. Immediate support levels are at ₹524 and ₹493.
On the other hand, Marico finds resistance at ₹559. A close above that level will reconfirm the bullish trend and lift the stock above ₹595.
F&O pointers: Marico October futures closed at ₹539.85 against the spot close of ₹537.45. The futures’ premium of nearly ₹2.5 indicates that traders are willing to carry their long positions. Option trading indicates that the stock could move between ₹600 and ₹500.
Strategy: We advise traders to consider a plain vanilla put strategy — buy 535-strike put option, which closed with a premium of ₹8.65. As the market lot is 1,200 shares, this strategy will cost ₹10,380. This will be the maximum loss which will happen if the stock remains above ₹535 on expiry.
Profit potentials are high if Marico’s share price falls sharply. A close below ₹526.35 will turn the position profitable. Hold this position for at least two weeks.
Initial stop-loss can be placed at ₹3.50. If the stock opens on a negative note and the premium of 535-put moves to ₹12, stop-loss can be placed at ₹8.75. Exit the position if the premium hits ₹20.
Follow-up: Book profit in Titan long strangle strategy, as the price rose sharply. Traders can hold SBI 600-call, recommended as a part of calendar spread strategy in the previous week.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading