The stock of Hindustan Aeronautics Ltd (HAL) (₹2,479.1) finds an immediate support at ₹2,355 and a resistance at ₹2,542. Though the long-term outlook remains positive (as long as it remains above ₹1,892), we expect the stock to trade in the narrow range of ₹2,300-2,600 in the short term. Any break from this band will trigger a sharp movement in that direction. The company came out with strong Q2 results last week.

F&O pointers: HAL November futures (₹2,474.65) closed at a discount to the spot price of ₹2.479.1. Despite a sharp gain on Friday, HAL December futures witnessed long winding. Option trading indicates a movement in the ₹2,400-2,900 range, where respective puts and calls saw higher concentration of open positions.

Strategy: We advise traders to consider short strangle on HAL that can be initiated by selling 2250-put (₹8.65) and 2750-call (₹8.70). The inflow will be ₹8,217.50, which will be the maximum profit. This can be realised if the stock expires ₹2,250 and ₹2,750. Note that this involves higher risk as it involves option selling.

A close above ₹2,767.35 or below ₹2,322.65 will start hurting the position. Traders should constantly monitor the price movement and act deftly due to the risks involved. Also remember that this strategy requires high margins.

Follow-up: We advise traders to hold on to the IRCTC (bull-call spread) strategy for one more week and re-evaluate later.

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

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