The outlook for TVS Motor Company (₹2,767) remains positive. Support levels are ₹2,575 and ₹2,314. A close below the latter will alter the current bullish view on TVS Motor.
But if the stock sustains current momentum, it can reach ₹2,995. We expect the momentum to sustain.
F&O pointers: TVS Motor August and September futures closed at ₹2,771.80 and ₹2,787.35 against the spot price of ₹2,767. The counter witnessed a rollover of a modest 16 per cent to next month series. The high premium indicates long rollovers. Option trading indicates that the stock could move in the ₹2,500-3,000 range.
Strategy: Consider calendar bull-call spread on TVS Motor. This can be initiated by selling the current month 2,800-call and simultaneously buying the same strike September call.
These options closed with a premium of ₹23.70 and ₹82.85 respectively, resulting in net outflow of ₹59.15. As the market lot is 350, this strategy would cost traders about ₹20,702.50, which would be the maximum loss. The profit potentials are huge if TVS Motor rules at or below ₹2,800-level during August expiry and rises sharply after that.
Exit if the loss mounts to ₹8,500. Hold the position for at least two weeks.
Follow-up: We recommended calendar bull spread on Aurobindo Pharma. The position is slightly positive currently. Traders can exit the August (short) call on every decline in underlying and continue to hold Aurobindo Sept (long) call for one more week to enhance profits.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading