F&O Strategy: Buy Lodha call option

The near-term outlook for the stock of Macrotech Developers (Lodha) (₹1,176.95) remains neutral. It finds major support at ₹1,065 and a resistance at ₹1,425.

While the short-term support appears at ₹1,124, Lodha finds an immediate resistance at ₹1,233. Only a close above ₹1,425 will change the outlook positive for the stock. But until then it will move in the aforementioned broader band with positive bias.

F&O pointers: Lodha January futures closed at ₹1,179.80 against the spot price of ₹1,176.95. Besides, the counter witnessed strong accumulation of open positions when the stock moved down from ₹1,453 to ₹1,130. Option trading indicates a range of ₹1,100-1,600.

Strategy: We advise traders to consider buying 1,200-strike call that closed with a premium of ₹33.70. As the market lot is 450 shares, this would cost traders ₹15,165, which would be the maximum loss. The maximum loss will happen if Lodha fails to cross ₹1,200 before expiry. The break-even point is ₹1,233.70.

On the other hand, profit potentials are high if the stock moves higher swiftly. We advise traders to keep initial stop-loss at ₹22. This can be shifted to ₹33 if the premium moves past ₹37. Traders can aim for a target of ₹50.

If the stock opens either up or down widely, traders can ignore this strategy.

Follow-up: Though Voltas moved on expected lines, this may not have provided an entry point as the stock opened sharply lower on Monday.

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