The stock of Punjab National Bank (₹166.2) rules at a crucial level and tests resistance at around ₹165. A conclusive close above ₹165 will trigger a fresh rally in the stock. In that event, it could go up to ₹187. A close above ₹215 will change the long-term outlook to positive, which could take the stock to new highs.
The PNB stock finds near-term support at ₹151. Only a close below ₹133 will change the immediate-term outlook to negative.
F&O pointers: The PNB August futures contract added fresh long positions in open interests on Friday along with a sharp surge in the share price, signalling bullish bet by traders. Option trading indicates strong support at ₹160 for Punjab National Bank.
Strategy: Traders can consider a bull call calendar spread on PNB. This can be constructed by selling ₹165-August-call option, which closed at ₹7.30, and simultaneously buying ₹165-September-call that closed with a premium of ₹9.95. The maximum loss in this strategy will be the net premium paid, which works out to ₹2.65/contract (or ₹5,300).
However, the profit potential will be unlimited in this strategy if the PNB stock surges sharply, post-August expiry. We advice traders to hold the position for at least four weeks and consider exiting the position if the loss touches ₹1,200.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.