F&O Strategy. Long strangle on ICICI Bank bl-premium-article-image

KS Badri Narayanan Updated - December 31, 2022 at 06:52 PM.

The long-term outlook will remain positive for the stock of ICICI Bank (₹890.85) as long as it stays above ₹762. The short-term support and resistance levels are placed at ₹851 and ₹919, respectively. A close above the latter will trigger a fresh rally on the stock. Yet, we expect the short-term outlook to remain weak for ICICI Bank.

F&O pointes: The ICICI Bank January futures witnessed accumulation of open positions despite the stock falling from ₹965 to ₹898 level. The contract closed at ₹897.10 against the spot price of ₹890.85. This signals the existence of long positions. Option trading indicates that the stock could move between ₹850 and ₹1,000.

Strategy: Traders could consider a long strangle on ICICI Bank. This can be constructed by simultaneously buying the 920-call and 870-put option. These options closed with a premium of ₹11.30 and ₹9.85 respectively. As the market lot is 700 shares, this would cost traders ₹14,805, which would be the maximum loss one can suffer. The maximum loss will happen if ICICI Bank is stuck between ₹920 and ₹870 in the series.

The position would turn positive if the stock closed above ₹941.15 or below ₹848.15. We advise traders to enter positions if the combined premium stands between ₹18 and ₹25 and may exit from in the range of ₹40-45. We expect the stock to swing either of the sides ahead of pre-Budget.

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

Published on December 31, 2022 13:22

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