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The outlook for DLF (₹223.9) has turned bullish. The stock finds immediate support at ₹204 and a crucial one at ₹169. A close below the latter will change the outlook negative for DLF. On the other hand, if DLF sustains the rally, it can trend upwards to ₹270. Immediate resistance appears at ₹244.
F&O pointers: The DLF November futures added 34.5 lakh open positions on Friday, signalling a positive bias. Trading in options indicates that the stock could rally up to ₹240. It has a strong support at ₹210.
Strategy: Traders may consider a calendar bull-call spread on DLF. This can be initiated by selling ₹230-call of the current series and simultaneously buying the same strike call of December contracts. These options closed with a premium of ₹5.70 and ₹12.40 respectively.
As this strategy costs an outflow of ₹4.65/contract, one could suffer a maximum loss of ₹33,500 (market lot 5,000 units per contract). That happens if DLF fails to move from the current levels on the upside in a big way.
On the other hand, profit potentials are very high, if DLF falls this month and moves up sharply in the next month. A close above ₹235 will start yielding positive returns. We advice traders to hold the long position till the second week of December series expiry or exit the position if the loss mounts of ₹10,000.
Follow-up: For those who had not booked profits, exit L&T Finance Holdings position.
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