Future Perfect. Consider bull-call spread on DLF

The short-term outlook has turned positive for DLF (₹121.4). A conclusive close above ₹122 can lift it to₹132 and a sustained rally can even take it to ₹146. However, the medium-term outlook will turn positive only on a close above ₹172. Support is at ₹117.

A close below it will alter the short-term outlook while a close below ₹105 will trigger fresh sell-off.

F&O pointers: The DLF futures added fresh long positions on Friday with 44.4 lakh shares in open interest. Put options indicates strong support at ₹110. Call options suggest a move in the ₹120-130 range.

Strategy: Traders can consider the bull-call spread strategy by selling 130 call and simultaneously buying 120 call. These options closed with a premium of ₹2.85 and ₹6.7, respectively.

This strategy involves an outflow of ₹3.85/contract. So, the maximum loss can be ₹19,250 (market lot 5,000 units per contract) if DLF closes at or below ₹120. On the other hand, traders can receive a maximum profit of ₹30,750 if DLF closes at or above ₹130.

We advice traders to hold the position for at least three weeks.

Exit the position if the premium dips to ₹1.75 (that is, a loss of ₹10,500).