The long-term outlook for the stock of Ashok Leyland (₹179.30) remains positive. But in the short term, it may face some resistance. Immediate supports are at ₹168 and ₹154.70. A close below the latter will overturn the bullish outlook on the stock.

But if the stock manages to sustain the current rally and holds above ₹170.90, then it has the potential to cross the ₹200-mark. However, there is a higher possibility of Ashok Leyland moving sideways with down bias.

F&O traders: Ashok Leyland futures witnessed a rollover of 88 per cent to August series. The August futures closed with a healthy premium at ₹181.10 against the spot price ₹179.30, indicating existence of long positions. Option trading indicates that the stock could move in the ₹175-190 range.

Strategy: Consider selling 200-call on Ashok Leyland, which closed with a premium of ₹1.30. As the market lot is 5,000 shares, this strategy would yield an income of ₹6,500 which would be the maximum profit. To receive maximum profits, Ashok Leyland has to hold below ₹200 until expiry.

However, loss potentials are huge if Ashok Leyland surges sharply beyond ₹201.30 within this month. Therefore, this strategy is strictly for traders who understand risks involved in option selling. This position can be reviewed next week.

Follow-up: Gail India has moved on expected lines. However, sadly the liquidity in 111-strike call is very poor, making the exit difficult. Those who are stuck can consider exiting when liquidity improves.

Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading

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