Thanks to the strong rally last week, the short-term outlook turned positive for Wipro (₹484.55). However, the long-term outlook will turn positive only on a close above ₹603. Immediate supports are at ₹456 and ₹434.
F&O pointers: Wipro June futures closed at ₹485.40 against the spot price of ₹484.55. The June futures witnessed unwinding of open positions in the last few days even as the stock price was moving up. This and the small premium over the spot price indicate traders are willing to book profits rather than rolling over their positions.
Strategy: Consider a bull-call spread on Wipro. This can be done by selling 500-call and simultaneously buying 490-call. These options closed with a premium of ₹7.1 and ₹10.35 respectively.
As the market lot is 1,500 shares, this strategy would cost traders ₹4,875, which would be the maximum loss. The maximum loss would happen if the stock is stuck below ₹490. However, a close above ₹500 will yield a profit of ₹6.75 or ₹10,125 per lot. We advise traders to hold the position for the next two weeks. Stay away from trading if the stock rises sharply on Monday.
Follow-up: We had advised buying 70,000-strike call of Nifty Next 50. As expected, the market was volatile, and the index too swung extremely. It would have provided profit opportunities but for those who failed to exit, the position would have turned negative. We advise traders who are still holding to exit.
Note: The recommendations are based on technical analysis and F&O positions. There is a risk of loss in trading