The stock of Adani Ports and SEZ (₹767.55) remains at a crucial level. The stock finds an immediate support at ₹705 and resistance at ₹811. It appears that the current rally in the stock may sustain.
F&O pointers: The Adani Ports and SEZ shed open positions in the last few days along with rise in share price. This indicates that traders preferred to unwind positions to book profits. Option trading indicates that the stock can move in the ₹700-800 range.
Strategy: Traders could consider buying 770-strike call option on the stock that closed with a premium of ₹16.05. As the market lot is 1250 shares, this would cost traders ₹20,062.50, which would be the maximum loss one can suffer. Maximum loss will happen if Adani Ports and SEZ stays at ₹770 or dips below this level on expiry.
On the other hand, profit potential is high if the stock surges sharply. The position will turn positive on a move above ₹786.05 i.e., this is the breakeven price. As this week is set to see expiry of May contracts, stocks will be volatile.
Traders could exit the position if loss mounts to ₹11,500. As Adani is one of the high-beta stocks, we advise traders to use stop-loss deftly to cut losses and protect profit as well. If the stock opens sharply higher on Monday, traders can ignore this strategy.
Follow-up: Long strangle on Tata steel provided profit opportunity last week.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading.