The stock of Gail India (₹129.5) is ruling in crucial level. It finds an immediate support at ₹121 and a close below will trigger a fresh downfall that can take it to ₹110 or even to ₹85.

On the other hand, GAIL India finds an immediate resistance at ₹138 and another one at ₹158.

Technically, the short-term outlook for GAIL India is negative. However, we expect the stock to see a pull back after a recent fall.

F&O pointers: Open interest positions increased to 4.45 crore shares on Friday from 4.31 crore shares on December 1, even as Gail India was hovering around ₹130. However, the increase in open positions was not steady and on some days the open positions slipped. Option trading indicates that the stock will move in a range between ₹120 - ₹150.

Strategy: We advise traders to consider buying Gail India ₹132.50-call option that closed with a premium of ₹2.25 on Friday. As the market lot is 6,100, this strategy would cost investors ₹13,725, which would be the maximum loss one can suffer. For maximum loss to happen, Gail India has to rule below ₹132.50 on expiry. The break-even price for the strategy is ₹134.75.

Profit potentials are high if Gail India moves up sharply in the current series. We advise to exit the position with a profit of ₹13,000 or exit if loss mounts to ₹7,500.

Follow-up: We advise traders to book profit in Tata Power (recommended last week - Short ₹250-call) and bull-call spread on Tech Mahindra (recommended a fortnight ago). With respect to the calendar spread on Nifty 50 options recommended few weeks back, exit December expiry 17,000-call short and hold long 17,000-call of March series.

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

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