The outlook for Zee Entertainment is neutral. After moving in a range between ₹500 and ₹610, the stock fell to hit ₹410, after which it recovered a little. But, it could move in a narrow range with downward bias. Only a close above ₹565 will change the outlook to positive.

F&O pointer: The December contract accumulated over 4.5 lakh shares (3.63 per cent) on Friday with a sharp gain in underlying share price. This indicates positive bias. Option trading indicates a ₹460-520 range for the stock.

Strategy: We advise traders to consider a long strangle on Zee Entertainment. This can be done by buying 510-call and 440-put. These options closed with a premium of ₹6 and ₹4.10 respectively. As the market lot is 1,300 shares, this works out to ₹13,130.

The maximum loss is the premium paid. That will happen if the stock is stuck between ₹510 and ₹440.

However, profit potentialis huge, if the stock swings in one direction sharply. A close above ₹520.10 or below ₹429.90 will turn the position positive.

We advise traders to hold the position for two weeks or if the loss mounts to ₹7,500. Since the results of the State elections would be out on Tuesday, the stock could take a clear direction.

Follow-up: Stop-loss would have been triggered; those holding can exit ACC.

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